BROWN FORMAN CORP
For the period ended Jul 31, 2026. Filed Sep 2, 2026.
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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, 2026 · Filed Sep 2, 2026
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 2026-01-31; filed 2026-03-04.
0000014693-26-000010
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-07-31; filed 2026-09-02.
0000014693-26-000052
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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20 unchanged; 37 reworded; 72 added; 129 removed; 0 previous and 5 current paragraphs rearranged.
Tables are not compared: 10 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (72)
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Introduction
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Our MD&A is organized as follows:
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•We delivered operating income of $252 million for the three months ended July 31, 2026, a decrease of 3%. Operating margin decreased 0.5 percentage points to 27.7% from 28.2% in the same period last year, primarily due to higher operating expenses, partially offset by gross margin expansion.
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1 See “Non-GAAP Financial Measures” for details on our use of “organic change,” including how we calculate these measures and why we believe this information is useful to readers.
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3 Total operating expenses include advertising expenses, SG&A expenses, restructuring and other charges, and other expense (income), net.
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Results of Operations
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The decline was driven by:
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•an estimated net decrease in distributor inventories reflecting prior-year distributor transitions; and
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•decreases of JDTB following the distributor inventory build ahead of the prior-year product launch.
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•the impact of the JDCC transition.
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Australia’s net sales increased 10%, driven by the positive effect of foreign exchange and the growth of JDTW, which partially benefited from favorable timing of retailer ordering patterns.
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The United Kingdom’s net sales declined 5%, driven by declines of JDTW and Gentleman Jack, as well as lower volumes of JDTH, partially offset by the launch of JDTB.
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France’s net sales declined 14%, led by lower volumes of JDTW and JDTH, as well as the unfavorable timing of retailer ordering patterns, partially offset by the launch of JDTB.
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Spain’snet sales declined 16%, driven by lower volumes of JDTW.
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Rest of Developed International’snet sales declined 10%, driven by lower volumes of JDTW, led by Switzerland and Italy; an estimated net decrease in distributor inventories; and the negative effect of foreign exchange. These decreases were partially offset by the continued international launch of JDTB.
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Mexico’s net sales increased 26%, driven by higher volumes of New Mix and JD RTD/RTP due to strong consumer demand, as well as the positive effect of foreign exchange.
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Poland’s net sales declined 4%, driven by lower volumes of JDTW, partially offset by the launch of JDTB.
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Brazil’s net sales declined 12%, driven by lower volumes of JDTW, JDTA, and JDTH, partially due to the unfavorable timing of the retailer ordering patterns. These declines were partially offset by the launch of JDTB.
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Türkiye’s net sales declined 14%, driven by the negative effect of foreign exchange, partially offset by higher volumes and prices across our portfolio, led by JDTW.
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Rest of Emerging’snet sales increased 20%, driven by broad-based volume gains of JDTW and the continued international launch of JDTB, led by the United Arab Emirates.
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Travel Retail’snet sales declined 1%, as the channel was impacted by the Middle East geopolitical headwinds. The declines were driven by lower volumes of Gin Mare, partially offset by the launch of JDTB.
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JDTW’snet sales were flat, as growth in the United States, due to timing of distributor ordering patterns in our transition markets, and higher volumes in the United Arab Emirates were offset by lower volumes in Brazil, Germany, and France.
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JDTH’snet sales declined 10%, driven by lower volumes in the United States and Chile, partially due to an estimated net decrease in distributor inventories.
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Gentleman Jack’snet sales declined 16%, driven by lower volumes in the United States and decreases in the United Kingdom.
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JDTA’snet sales declined 8%, driven by decreases in Brazil and lower volumes in Chile, partially due to an estimated net decrease in distributor inventories.
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JDTF’s net sales declined 10%, driven by broad-based volume declines, led by the United States.
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Woodford Reserve’snet sales were flat, as higher net pricing was offset by an estimated net decrease in distributor inventories.
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Old Forester’snet sales increased 1%, driven by the United States, as favorable mix was partially offset by an estimated net decrease in distributor inventories.
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Rest of Whiskey’snet sales increased 33%, driven by the continued international launch of JDTB, led by Brazil, partially offset by an estimated net decrease in distributor inventories in the United States.
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JD RTD/RTPbrands’ net sales increased 6%, driven by the impact of the JDCC transition, the positive effect of foreign exchange, and higher volumes in Mexico. These increases were partially offset by declines in Germany and the United States.
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New Mix’snet sales increased 48%, driven by higher volumes in Mexico, the positive effect of foreign exchange, and the launch in the United States.
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el Jimador’snet sales declined 10%, driven by lower net pricing in the United States.
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Herradura’s net sales declined 17%, driven by lower volumes in the United States and lower net pricing in Mexico.
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Rest of Portfolio’snet sales declined 35%, driven by the end of Korbel relationship and lower volumes of Gin Mare.
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Year-Over-Year Comparisons
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Net Sales
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Net sales were $911 million, a decrease of $13 million, or 1%, driven by unfavorable price/mix and the end of the Korbel relationship, partially offset by higher volumes, the positive effect of foreign exchange, and the impact of the JDCC transition.
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•Volume increased 7%, driven by New Mix and the continued international launch of JDTB, partially offset by lower volumes of JD RTD/RTP and JDTH.
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See “Results of Operations - Market Highlights” and “Results of Operations - Brand Highlights” above for further details on the factors contributing to the change in reported net sales for the three months ended July 31, 2026.
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Removed paragraphs (129)
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Presentation Basis
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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 contingent consideration liability that is payable in cash no later than July 2027 from our other expense (income), net and operating income.
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During fiscal 2024, we sold our Finlandia vodka and Sonoma-Cutrer wine businesses and entered into related transition services agreements (TSAs) for these businesses. This adjustment removes the net sales, cost of sales, operating expenses, and operating income recognized pursuant to the TSAs related to distribution services in certain markets for the non-comparable period, which is activity from the first, second, and third quarters of fiscal 2025.
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During the first quarter of fiscal 2025, we recognized a gain of $12 million on the sale of the Alabama cooperage. This adjustment removes the gain from our other expense (income), net and operating income.
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“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.
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“Restructuring initiative.”During the third quarter of fiscal 2025, our Board of Directors approved a plan to reduce our structural cost base and realign resources toward future sources of growth. This included reducing our workforce by approximately 12% and closing the Louisville-based Brown-Forman Cooperage. We also offered a special, one-time early retirement benefit to qualifying U.S. employees. During the first nine months of fiscal 2026, we incurred
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1 Operating expenses include advertising expense, SG&A expense, restructuring and other charges, and other expense (income), net.
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Definitions
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Aggregations.
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From time to time, to explain our results of operations or to highlight trends and uncertainties affecting our business, we aggregate markets according to stage of economic development as defined by the International Monetary Fund (IMF), and we aggregate brands by beverage alcohol category. Below, we define the geographic and brand aggregations used in this report.
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Geographic Aggregations.
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In “Results of Operations - Fiscal 2026 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:
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•“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, and Canada. This aggregation represents our net sales of branded products to these markets.
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•“Emerging”markets are “emerging and developing economies” as defined by the IMF. Our top emerging markets were Mexico, Poland, Brazil, and Türkiye. This aggregation represents our net sales of branded products to these markets.
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•“Brazil”includes Brazil, Paraguay, Uruguay, and certain other surrounding territories.
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•“Travel Retail” represents our net sales of branded products to global duty-free customers, other travel retail customers, and the U.S. military, regardless of customer location.
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•“Non-branded and bulk” includes net sales of used barrels, contract bottling services, and non-branded bulk whiskey, regardless of customer location.
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Brand Aggregations.
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In “Results of Operations - Fiscal 2026 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.
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•“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, Benriach, Glenglassaugh, and Slane Irish Whiskey.
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•“American whiskey” includes the Jack Daniel’s family of brands (excluding the “Ready-to-Drink” products defined below), Woodford Reserve, and Old Forester.
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•“Super-premium American whiskey” includes Woodford Reserve, Gentleman Jack, and other super-premium Jack Daniel’s expressions.
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•“Ready-to-Drink” includes all ready-to-drink (RTD) and ready-to-pour (RTP) products. The brands included in this category are Jack Daniel’s RTD and RTP products (JD RTD/RTP), New Mix, and other RTD/RTP products.
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•“Jack Daniel’s RTD/RTP” products include all RTD line extensions of Jack Daniel’s, such as Jack Daniel’s & Coca-Cola RTD, Jack Daniel’s & Cola, Jack Daniel’s Double Jack, Jack Daniel’s Country Cocktails (JDCC)1, and other malt- and spirit-based Jack Daniel’s RTDs, along with Jack Daniel’s Winter Jack RTP.
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•“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.
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•“Tequila” includes el Jimador, the Herradura family of brands (Herradura), and other tequilas.
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•“Rest of Portfolio” includes Korbel California Champagnes 2, Diplomático, Chambord, Gin Mare, Sonoma-Cutrer (which was divested on April 30, 2024), Finlandia Vodka (which was divested on November 1, 2023), Korbel Brandy 2, Fords Gin, and other agency brands (brands we do not own, but sell in certain markets).
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•“Non-branded and bulk” includes net sales of used barrels, contract bottling services, and non-branded bulk whiskey.
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•“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 Blackberry (JDTB), 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 Bonded Rye Tennessee Whiskey, Jack Daniel’s American Single Malt, Jack Daniel’s Triple Mash Blended Straight Whiskey, Jack Daniel’s 10 Year Old, Jack Daniel’s 14 Year Old, Jack Daniel’s 12 Year Old, and other Jack Daniel’s expressions.
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Other Metrics.
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•“Shipments.”We generally record revenues when we ship or deliver our products to our customers. In this report, unless otherwise specified, we refer to shipments when discussing volume.
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•“Depletions.”This metric is commonly used in the beverage alcohol industry to describe volume. Depending on the context, depletions usually means either (a) where Brown-Forman is the distributor, shipments directly to retail or wholesale customers or (b) where Brown-Forman is not the distributor, shipments from distributor customers to retailers and wholesalers. We believe that depletions measure volume in a way that more closely reflects consumer demand than our shipments to distributor customers do.
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•“Consumer takeaway.” When discussing trends in the market, we refer to consumer takeaway, a term commonly used in the beverage alcohol industry that refers to the purchase of product by consumers from retail outlets, including products purchased through e-commerce channels, as measured by volume or retail sales value. This information is provided by outside parties, such as Nielsen and the National Alcohol Beverage Control Association (NABCA). Our estimates of
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2 Ended the Korbel relationship effective June 30, 2025.
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market share or changes in market share are derived from consumer takeaway data using the retail sales value metric. We believe consumer takeaway is a leading indicator of consumer demand trends.
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•“Estimated net change in distributor inventories.” We generally recognize revenue when our products are shipped or delivered to customers. In the United States and certain other markets, our customers are distributors that sell downstream to retailers and consumers. We believe that our distributors’ downstream sales more closely reflect actual consumer demand than do our shipments to distributors. Our shipments increase distributors’ inventories, while distributors’ depletions (as described above) reduce their inventories. Therefore, it is possible that our shipments do not coincide with distributors’ downstream depletions and merely reflect changes in distributors’ inventories. Because changes in distributors’ inventories could affect our trends, we believe it is useful for investors to understand those changes in the context of our operating results.
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We perform the following calculation to determine the “estimated net change in distributor inventories”:
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•For both the current-year period and the comparable prior-year period, we calculate a “depletion-based” amount by (a) dividing the organic dollar amount (e.g. organic net sales) by the corresponding shipment volumes to arrive at a shipment per case amount, and (b) multiplying the resulting shipment per case amount by the corresponding depletion volumes. We subtract the year-over-year percentage change of the “depletion-based” amount from the year-over-year percentage change of the organic amount to calculate the “estimated net change in distributor inventories.”
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•A positive difference is interpreted as a net increase in distributors’ inventories, which implies that organic trends could decrease as distributors reduce inventories; whereas, a negative difference is interpreted as a net decrease in distributors’ inventories, which implies that organic trends could increase as distributors rebuild inventories.
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Important Information on Forward-Looking Statements:
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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, 2025 (2025 Form 10-K). Note that the results of operations for the nine months ended January 31, 2026, 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.
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This MD&A is intended to help the reader better understand Brown-Forman, our operations, our financial results, and our current business environment. 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 2026 Form 10-K. Note that the results of operations for the three months ended July 31, 2026, are not necessarily indicative of future or annual results. Unless otherwise indicated, all related commentary is on a reported basis and is for the three months ended July 31, 2026, compared to the same period last year.
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•We delivered net sales of $3.0 billion for the nine months ended January 31, 2026, a decrease of 2%. The decrease was driven by the negative effect of acquisitions and divestitures and unfavorable portfolio mix, partially offset by higher volumes and the positive effect of foreign exchange.
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•We delivered net sales of $911 million for the three months ended July 31, 2026, a decrease of 1%. The decrease was driven by unfavorable price/mix and the end of the Korbel relationship, partially offset by higher volumes, the positive effect of foreign exchange, and the impact of the JDCC transition.
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◦From a brand perspective, net sales declines were drivenby the end of the Korbel relationship and the absence of the Sonoma-Cutrer prior-year TSA, as well as lower sales of used barrels and JDTW, partially offset by the launch of JDTB and growth of New Mix.
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◦From a brand perspective, net sales declines were driven by the end of the Korbel relationship, as well as the decline of used barrel sales and tequilas, partially offset by the growth of RTDs.
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◦From a geographic perspective, the declines in net sales in the United States and developed international markets were partially offset by growth in emerging markets and Travel Retail.
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◦From a geographic perspective, net sales declines in developed international markets and the United States were partially offset by growth in emerging markets.
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•We delivered gross profit of $1.8 billion for the nine months ended January 31, 2026, a decrease of 1%. Gross margin increased 0.5 percentage points to 59.9% from 59.4% in the same period last year. The increase in gross margin was driven by the positive effect of acquisitions and divestitures and the positive effect of foreign exchange, partially offset by higher costs and unfavorable price/mix.
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•We delivered gross profit of $549 million for the three months ended July 31, 2026, a decrease of 1%. Gross margin increased 0.4 percentage points to 60.2% from 59.8% in the same period last year. The increase in gross margin was driven by lower costs and the end of the Korbel relationship, partially offset by the negative effect of foreign exchange and unfavorable price/mix.
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•We delivered diluted earnings per share of $1.41 for the nine months ended January 31, 2026, a decrease of 8% from the $1.53 reported for the same period last year, driven by the absence of gain on sale of our investment in Duckhorn and an increase in non-operating postretirement expense, partially offset by lower interest expense, net.
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•We delivered diluted earnings per share of $0.38 for the three months ended July 31, 2026, an increase of 6% from the $0.36 reported for the same period last year, driven by the lower non-operating postretirement expense and the accretive impact from share repurchases executed in the prior year, partially offset by the decrease in operating income.
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4 Percentage change is not meaningful.
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2 Percentage change is not meaningful.
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3 Year-over-year changes in percentages are reported in percentage points (pp).
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4 Year-over-year changes in percentages are reported in percentage points (pp).
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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 nine months ended January 31, 2026, compared to the same period last year.
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The following table provides supplemental information for our largest markets. We discuss results of the markets most affecting our performance below the table.
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1 See “Definitions” above for definitions of market aggregations presented here.
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1 See “Definitions” for definitions of market aggregations presented here.
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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.
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3 See “Non-GAAP Financial Measures” 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.
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The United States’ net sales declined 8% driven by the end of the Korbel relationship and the absence of the Sonoma-Cutrer prior-year TSA, as well as lower volumes, led by JDTW, Herradura, and JDTH. These declines were partially offset by (a) new product launches, including JDTB, Jack Daniel’s Single Barrel Heritage Barrel, and New Mix, (b) higher net pricing across the portfolio as a result of changes to our distributor relationship terms, and (c) higher volumes of Woodford Reserve due to timing of distributor ordering patterns in our transition markets.
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The United States’ net sales declined 3%.
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•Herradura’s net sales declined 11% driven by lower volumes in the United States.
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Germany’s net sales declined 11%, driven by lower volumes of JDTW and JD RTD/RTP, as well as the unfavorable timing of retailer ordering patterns. These declines were partially offset by the launch of JDTB.
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Non-branded and bulk’snet sales decreased 64% driven by the decline of used barrel sales as demand and pricing adjusted to levels that reflect the current challenging and uncertain operating environment for our industry.
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Non-branded and bulk’snet sales decreased 61%, driven by the decline of used barrel sales.
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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 nine months ended January 31, 2026, compared to the same period last year.
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The following table provides supplemental information for our largest brands. We discuss results of the brands most affecting our performance below the table.
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1 See “Definitions” above for definitions of brand aggregations presented here.
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1 See “Definitions” for definitions of brand aggregations presented here.
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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.
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3 See “Non-GAAP Financial Measures” 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.
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For the nine months ended January 31, 2026, cost of sales were $1.2 billion, a decrease of $42 million, or 3%, driven by favorable cost/mix, partially offset by higher volumes. Volume increased 2% driven by New Mix and the launch of JDTB, due in part to a net increase in distributor inventories in the United States, partially offset by the end of the Korbel relationship and the Sonoma-Cutrer prior-year TSA, as well as lower volumes of JD RTD/RTP and JDTW. Cost/mix declined 5% driven by the end of the Korbel relationship, the absence of the Sonoma-Cutrer prior-year TSA, favorable portfolio mix from New Mix, as well as lower agave costs. These declines were partially offset by unfavorable fixed cost absorption related to decreased production of our full-strength portfolio, inflation on our input costs, timing of cost fluctuations, and the negative effect of foreign exchange.
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•Cost/mix declined 11%, driven by favorable portfolio mix from New Mix and the timing of cost fluctuations, partially offset by unfavorable fixed cost absorption related to decreased production of our full-strength portfolio and inflation on our input costs.
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For the three months ended January 31, 2026, gross profit totaled $640 million, an increase of $22 million, or 4%. Gross margin increased to 60.6% from 59.8% in the same period last year. The increase in gross margin was driven by the positive effect of acquisitions and divestitures and the positive effect of foreign exchange, partially offset by unfavorable price/mix and higher costs.
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Gross margin increased to 60.2% from 59.8% in the same period last year. The increase in gross margin was driven by lower costs and the end of the Korbel relationship, partially offset by the negative effect of foreign exchange and unfavorable price/mix.
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1“Other items” includes “substitution drawback claims,” “franchise tax refund,” and “restructuring initiative.” See “Non-GAAP Financial Measures” above for additional details.
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*“Other Items” in gross profit includes “JDCC transition.” “Other Items” in operating expenses includes “substitution drawback claims,” “restructuring initiative,” and “JDCC transition.” See “Non-GAAP Financial Measures” for additional details.
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1“Other items” includes “substitution drawback claims,” “franchise tax refund,” and “restructuring initiative.” See “Non-GAAP Financial Measures” above for additional details.
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1“Other Items” includes “substitution drawback claims,” “restructuring initiative,” and “JDCC transition.” See “Non-GAAP Financial Measures” for additional details.
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Theeffective tax rate for the three months ended January 31, 2026 was 14.9% compared to 18.7% for the same period last year. The decrease in our effective tax rate was driven primarily by the favorable year-over-year impacts of tax rate changes, tax credits, lower state taxes, the effects of foreign taxes and changes in unrecognized tax benefits, which were partially offset by the unfavorable year-over-year impact of prior fiscal year true-ups.
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• the favorable year-over-year impact of prior fiscal year true-ups.
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Below we discuss our outlook for fiscal 2026, which reflects the trends, developments, and uncertainties (including those described above) that we expect to affect our business.
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Below we discuss our outlook for fiscal 2027, which reflects the trends, developments, and uncertainties that we expect to affect our business.
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•Capital expenditures planned to be in the range of $110 to $120 million.
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•Capital expenditures planned to be in the range of $60 to $70 million.
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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.
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We report our financial results in accordance with 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.
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“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.
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“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 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.
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•“Acquisitions and divestitures.” This adjustment removes (a) the gain or loss recognized on sale of divested brands and certain assets, (b) any non-recurring effects related to our acquisitions and divestitures (e.g., transaction, transition, and integration costs), (c) the effects of operating activity related to acquired and divested brands, including certain divested agency brands, for periods not comparable year over year (non-comparable periods), and (d) fair value changes to contingent consideration liabilities. Excluding non-comparable periods allows us to include the effects of acquired and divested brands only to the extent that results are comparable year over year. For the first, second, and third quarters of fiscal 2026, we had the following acquisitions and divestitures adjustments:
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•“Acquisitions and divestitures.” This adjustment removes (a) the gain or loss recognized on the sale of divested brands and certain assets, (b) any non-recurring effects related to our acquisitions and divestitures (e.g., transaction, transition, and integration costs), (c) the effects of operating activity related to acquired and divested brands, including certain divested agency brands, for periods not comparable year over year (non-comparable periods), and (d) fair value changes to contingent consideration liabilities. Excluding non-comparable periods allows us to include the effects of acquired and divested brands only to the extent that results are comparable year over year. For the first quarter of fiscal 2027, we had the following acquisitions and divestitures adjustments:
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During the first quarter of fiscal 2026, we ended our sales, marketing, and distribution relationship with Korbel Champagne Cellars (Korbel relationship), effective June 30, 2025. This adjustment removes the net sales, cost of sales, operating expenses, and operating income for the non-comparable period, which is July through January of fiscal 2025 and fiscal 2026.
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During the first quarter of fiscal 2026, we ended our Korbel relationship. This adjustment removes the net sales, cost of sales, operating expenses, and operating income for the non-comparable period, which is activity from May through June of fiscal 2026.
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$19 million in restructuring and other charges associated with this initiative and completed the sale of the Brown-Forman Cooperage facility and related assets. Comparatively, we incurred $33 million in related restructuring and other charges in the second and third quarters of fiscal 2025. This adjustment removes the restructuring initiative impact from our operating expenses and operating income for the second and third quarters of fiscal 2025 and the first nine months of fiscal 2026. See Note 6 to the Condensed Consolidated Financial Statements for more information.
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“Restructuring initiative.” During the first quarter of fiscal 2026, we incurred $12 million in restructuring and other charges associated with the restructuring initiative and completed the sale of Brown-Forman Cooperage facility and related assets. The actions associated with this initiative were substantially completed during fiscal 2026. This adjustment removes the restructuring initiative impact from our operating expenses and operating income for the first quarter of fiscal 2026. See Note 5 to the Condensed Consolidated Financial Statements for more information.
Previous wording
“Substitution drawback claims.”During the first quarter of fiscal 2026, we recognized a net benefit of $18 million related to the collection of substitution drawback claims filed with the U.S. Government between fiscal 2016 and 2019. As of the first quarter of fiscal 2026, all claims have been collected. This adjustment removes the benefit from our other expense (income), net and operating income.
Current wording
“Substitution drawback claims.”During the first quarter of fiscal 2026, we recognized a net benefit of $18 million related to the collection of substitution drawback claims filed with the U.S. Government between fiscal 2016 and 2019. As of the end of the first quarter of fiscal 2026, all claims had been collected. This adjustment removes the benefit from our other expense (income), net and operating income.
Previous wording
1 As announced on March 2, 2026, we agreed to conclude our relationship with Pabst Brewing Company for flavored malt beverages within the United States. We will assume management of the supply, sales, marketing, and distribution of JDCC, effective July 7, 2026.
Current wording
“Jack Daniel’s Country Cocktails business model change (JDCC transition).”During fiscal 2026, we agreed to conclude our relationship with Pabst Brewing Company for flavored malt beverages within the United States. We began transitioning the management of JDCC’s supply, sales, marketing, and distribution in the first quarter of fiscal 2027. This adjustment removes the non-comparable operating activity related to JDCC products for the first quarter of fiscal 2026 and fiscal 2027.
Previous wording
We use the non-GAAP measure “organic change,” along with other metrics, to: (a) understand our performance from period to period on a consistent basis; (b) compare our performance to that of our competitors; (c) calculate components of management incentive compensation; (d) plan and forecast; and (e) communicate our financial performance to the Board of Directors, stockholders, and investment community. We provide reconciliations of the “organic change” in certain line items of the statements of operations to their nearest GAAP measures in the tables under “Results of Operations - Fiscal 2026 Year-to-Date Highlights” and “Results of Operations - Year-Over-Year Period Comparisons.” We have consistently applied the adjustments within our reconciliations in arriving at each non-GAAP measure. We believe these non-GAAP measures are useful to readers and investors because they enhance the understanding of our historical financial performance and comparability between periods. When we provide guidance for organic change in certain measures of the statements of operations we do not provide guidance for the corresponding GAAP change, as the GAAP measure will include items that are difficult to quantify or predict with reasonable certainty, such as foreign exchange, which could have a significant impact to our GAAP income statement measures.
Current wording
We use the non-GAAP measure “organic change,” along with other metrics, to: (a) understand our performance from period to period on a consistent basis; (b) compare our performance to that of our competitors; (c) calculate components of management incentive compensation; (d) plan and forecast; and (e) communicate our financial performance to the Board of Directors, stockholders, and investment community. We provide reconciliations of the “organic change” in certain line items of the statements of operations to their nearest GAAP measures in the tables under “Results of Operations” and in the“Reconciliation of Non-GAAP Changes” table below. We have consistently applied the adjustments within our reconciliations in arriving at each non-GAAP measure. We believe these non-GAAP measures are useful to readers and investors because they enhance the understanding of our historical financial performance and comparability between periods. When we provide guidance for organic change in certain measures of the statements of operations we do not provide guidance for the corresponding GAAP change, as the GAAP measure will include items that are difficult to quantify or predict with reasonable certainty, such as foreign exchange, which could have a significant impact to our GAAP income statement measures.
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 $444 million at April 30, 2025, and $383 million at January 31, 2026. As of January 31, 2026, approximately 48% 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 $308 million at April 30, 2026, and $301 million at July 31, 2026. As of July 31, 2026, approximately 53% 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
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 July 2026, dividend payments, share repurchases, and capital investments. We expect to meet our planned short-term liquidity needs 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), dividend payments, and capital investments. We expect to meet our planned liquidity needs through cash generated from operations, borrowings under our commercial paper program, and financing in the credit markets and the debt 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 flows. Cash provided by operating activities of $709 million during the nine months ended January 31, 2026, increased $263 million from the same period last year, reflecting lower working capital requirements, partially offset by lower earnings.
Current wording
Cash provided by operating activities of $173 million during the three months ended July 31, 2026, increased $13 million from the same period last year, reflecting higher earnings and lower working capital requirements.
Previous wording
Cash used for investing activities was $48 million during the nine months ended January 31, 2026, compared to $284 million in cash provided by investing activities during the same period last year. The $332 million decrease largely reflects (a) the absence of $350 million in proceeds from the sale of our equity method investment in Duckhorn in December 2024 and (b) an $18 million decrease in proceeds from cooperage asset sales ($51 million from the sale of our Alabama cooperage assets in May 2024; $33 million from the sale of our Brown-Forman Cooperage assets in May 2025), partially offset by (c) a $36 million decline in capital expenditures.
Current wording
Cash used for investing activities was $13 million during the three months ended July 31, 2026, compared to $2 million in cash provided by investing activities during the same period last year. The $15 million decrease largely reflects the absence of $33 million in proceeds from the sale of our Brown-Forman Cooperage assets in May 2025, partially offset by a $19 million decline in capital expenditures.
Previous wording
Cash used for financing activities was $737 million during the nine months ended January 31, 2026, compared to $546 million in cash used for financing activities during the same prior-year period. The $191 million increase largely reflects a $400 million increase in share repurchases and an $8 million increase in dividend payments, partially offset by a $214 million decrease in net repayments of short-term borrowings.
Current wording
Cash used for financing activities was $164 million during the three months ended July 31, 2026, compared to $138 million in cash used for financing activities during the same prior-year period. The $26 million increase largely reflects our repayment of the $343 million (€300 million) principal amount of the 1.20% senior notes that matured in July 2026, partially offset by a $319 million increase in net proceeds from short-term borrowings.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
•the end of the Korbel relationship;
Current report — wording carried from elsewhere
These declines were partially offset by:
Current report — wording carried from elsewhere
•higher volumes of JDTW due to timing of distributor ordering patterns in our transition markets; and
Current report — wording carried from elsewhere
Non-branded and bulk’snet sales decreased 61%, driven by the decline of used barrel sales.
Current report — wording carried from elsewhere
•Price/mix declined 8%, driven by unfavorable portfolio mix from New Mix.