Financial Performance - Reported net sales reached 904 million, a decrease of 1% on both a reported and underlying basis due to higher input and tariff-related costs[95] - Diluted earnings per share increased by 4% to 899 million, a reported change of (0.6%) and an underlying change of 3% compared to the same period in 2019[96] - Gross profit for the nine months ended January 31, 2020, was 304 million, a reported decrease of (5%) and an underlying increase of 5% compared to the same period in 2019[96] - Reported net sales for the nine months ended January 31, 2020, were 74 million, or 3%, compared to the same period last year[128] - Underlying net sales for the nine months increased 3%, driven by 2% volume growth and 1% price/mix, with significant contributions from the Jack Daniel's family of brands and Woodford Reserve[128] Market Performance - The United States led the underlying net sales growth, with contributions from both emerging and developed international markets, although there was a decline in the Travel Retail channel[95] - Reported net sales growth in the United States was 7%, with underlying net sales growth of 6% driven by premium bourbons and the launch of JDTA[103] - The United Kingdom experienced a reported net sales decline of (9%) and an underlying decline of (7%) due to reduced promotional activities[105] - Emerging markets reported a net sales increase of 4%, with underlying net sales growth of 6% led by Turkey, Russia, and China[109] - Travel Retail saw reported net sales decline of (4%) and an underlying decline of (3%) due to lower volumes of JDTW[111] Cost and Margin Analysis - Cost of sales for the nine months ended January 31, 2020, was 84 million, or 9%, compared to the same period last year[130] - Underlying cost of sales increased 10%, driven by higher input costs of agave and wood, as well as tariff-related costs[130] - Gross margin for the three months ended January 31, 2020, was 61.9%, down from 63.1% in the prior year[131] - Gross margin decreased approximately 1.2 percentage points to 61.9% for the three months ended January 31, 2020, primarily due to increased input costs and foreign exchange effects[133] - Operating margin decreased 1.5 percentage points to 33.8% for the three months ended January 31, 2020, from 35.3% in the same period last year[144] Cash Flow and Expenses - Cash provided by operations was 68 million from the same period last year[149] - Cash used for investing activities was 86 million for the same period last year[150] - Total operating expenses for the three months ended January 31, 2020, totaled 2 million, or 1%, compared to the same period last year[136] Tax and Earnings - The effective tax rate for the nine months ended January 31, 2020, was 19.2%, a decrease of (2.1) percentage points compared to the same period in 2019[96] - The effective tax rate for the three months ended January 31, 2020, was 18.6%, down from 20.3% for the same period last year[147] - Diluted earnings per share increased 2% to 0.47 for the same period last year[148] Product Performance - Underlying net sales growth was primarily driven by the Jack Daniel's family of brands, premium bourbon brands like Woodford Reserve, and tequila brands, with lower used barrel sales partially offsetting this growth[95] - Whiskey brands reported net sales growth of 4%, with underlying net sales growing 5% after adjusting for foreign exchange effects[116] - The launch of JDTA in the United States and JD RTDs in Germany contributed to the growth of the Jack Daniel's family of brands[116] - Tequila brands reported net sales growth of 9%, with underlying net sales increasing by 10% after adjusting for distributor inventory changes[119] - Reported net sales for Finlandia declined 8%, with underlying net sales decreasing 7% due to lower volumes and net prices in Poland[121] Outlook - The fiscal 2020 outlook indicates that underlying net sales growth is expected to be less than in fiscal 2019 due to global economic uncertainties and the impact of COVID-19[100]
Brown-Forman(BF_A) - 2020 Q3 - Quarterly Report