Financial Performance - Reported net sales for the first half of fiscal 2022 were 1.9billion,representinga9611 million for the six months ended October 31, 2021 [94]. - Diluted earnings per share for the first half of fiscal 2022 were 0.89,adecreaseof241.17 in the same period last year [94]. - Reported net sales for the six months ended October 31, 2021, were 1.9billion,anincreaseof162 million, or 9% compared to the same period last year [122]. - JDTW reported net sales increased 14%, driven by broad-based volume growth in the United States and international markets [110]. - JDTA reported net sales increased 55%, fueled by the brand's continued international launch in Brazil and Chile [112]. - Herradura reported net sales increased 41%, driven by increased volumes in the United States and Mexico [114]. - Reported net sales in Brazil increased 31%, fueled by the launch of JDTA and higher volumes of JDTW [104]. - Travel Retail reported net sales increased 38%, driven primarily by higher volumes across much of the portfolio [105]. - Reported net sales in the Rest of Emerging markets increased 50%, led by JDTW gains in Turkey, sub-Saharan Africa, and Chile [104]. Cost and Expenses - Reported cost of sales for the six months ended October 31, 2021, were 0.8billion,anincreaseof65 million, or 9% compared to the same period last year [124]. - Gross profit for the three months ended October 31, 2021, was 590million,anincreaseof9 million, or 2% compared to the same period last year [126]. - For the six months ended October 31, 2021, reported gross profit was 1.1billion,anincreaseof97 million, or 9% year-over-year [127]. - Reported operating expenses for the six months totaled 532million,anincreaseof76 million, or 17% compared to the prior year [131]. - Advertising expenses increased by 24% for the six months, primarily due to the cycling of reduced promotional activity during the same period last year [131]. Margins and Profitability - The gross margin for the three months ended October 31, 2021, increased to 59.3% from 59.0% in the same period last year [126]. - Gross margin for the same period decreased by 0.1 percentage points to 60.1% from 60.2% due to unfavorable cost/mix [127]. - Reported operating income for the six months was 611million,adecreaseof106 million, or 15% year-over-year, with an operating margin decrease of 9.1 percentage points to 32.1% [132]. Tax and Cash Flow - The effective tax rate is anticipated to be in the range of approximately 22-23% for the fiscal year [99]. - The effective tax rate for the six months was 24.9%, an increase from 16.4% in the same period last year, primarily due to deferred tax benefits recognized in the prior year [134]. - Cash and cash equivalents decreased by 77millionduringthesixmonths,withcashprovidedbyoperationsincreasingby52 million to 335million[136].−Cashusedforfinancingactivitieswas362 million during the six months, compared to 155millionforthesameperiodlastyear[138].StrategicInitiativesandRisks−Thecompanyusesnon−GAAPmeasurestoprovideaclearerunderstandingofunderlyingperformance,adjustingforacquisitions,foreignexchange,andinventorychanges[70].−Thecompanyfacessubstantialcompetitionfromnewentrantsandconsolidationsinthemarket,impactingpricingandmarketshare[89].−ThecompanyissignificantlydependentonthegrowthoftheJackDaniel′sfamilyofbrandsforitsrevenue[89].−Thecompanyanticipatespotentialdisruptionsinitsdistributionnetworkandinventoryfluctuationsaffectingsales[89].−Thecompanyisexposedtorisksassociatedwithacquisitionsandtheintegrationofnewbusinesses,whichmayimpactfinancialperformance[89].−Thecompanyisimplementingriskmitigationstrategiestoaddressongoingsupplychainchallenges,expectinglesssignificantimpactsinthesecondhalfofthefiscalyear[98].−Supplychaindisruptions,particularlyrelatedtoglasssupply,negativelyimpactedfinishedgoodsinventoriesandnetsales[93].Dividends−TheBoardofDirectorsincreasedthequarterlycashdividendfrom0.1795 to 0.1885pershareanddeclaredaspecialcashdividendof1.00 per share [146].
