Brown-Forman(BF_A) - 2024 Q1 - Quarterly Report

Sales Performance - For the three months ended July 31, 2023, the company experienced broad-based reported net sales growth across emerging and developed international markets, and the Travel Retail channel[130]. - Reported net sales for the three months ended July 31, 2023, were $1.0 billion, a 3% increase year-over-year, driven by favorable price/mix and acquisitions of Gin Mare and Diplomático[131]. - Reported net sales in the United States decreased by 8%, driven by lower volumes and an estimated net decrease in distributor inventories[141]. - Mexico's reported net sales increased by 44%, driven by higher volumes and prices of New Mix[137]. - Reported net sales for JDTA increased by 49%, driven by the product launch in Korea and higher volumes in Brazil[153]. - Reported net sales for New Mix grew by 52%, fueled by higher volumes and prices in Mexico[157]. - The Travel Retail channel reported a 13% increase in net sales, primarily due to higher volumes of Woodford Reserve[145]. - Reported net sales for the three months ended July 31, 2023, were$ 1.0 billion, an increase of $31 million, or 3%, compared to the same period last year[162]. Financial Metrics - Reported gross profit was$ 0.7 billion, an increase of $29 million or 5% compared to the same period last year, with a gross margin of 62.7%, up 0.9 percentage points[131]. - Operating income decreased by 4% to$ 327 million, reflecting higher operating expenses[131]. - Diluted earnings per share were $0.48, a decrease of 7% from$ 0.52 in the same period last year, primarily due to lower operating income and higher interest expense[131]. - The effective tax rate for the three months ended July 31, 2023, was 22.9%, down from 23.6% for the same period last year[170]. - Reported operating income totaled $327 million, a decrease of$ 16 million, or 4%, compared to the same period last year[169]. - Diluted earnings per share for the three months ended July 31, 2023, were $0.48, a decrease of 7% from$ 0.52 reported for the same period last year[171]. Operating Expenses - Operating expenses increased by 16% to $324 million, with advertising expenses rising by 19% to$ 131 million[138]. - Total operating expenses for the three months ended July 31, 2023, were $324 million, an increase of$ 45 million, or 16%, compared to the same period last year[168]. Cash Flow - Cash and cash equivalents increased from $374 million at April 30, 2023, to$ 426 million at July 31, 2023[173]. - Cash provided by operations was $38 million during the three months ended July 31, 2023, a decline of$ 135 million from the same period last year[176]. Market Insights - The company reported that consumer takeaway is a leading indicator of consumer demand trends, derived from third-party data[123]. - The company faces risks including competition, changes in consumer preferences, and potential disruptions in the supply chain[128]. - Forward-looking statements indicate that actual results may differ materially from projections due to various risks and uncertainties[126]. Growth Expectations - Organic net sales growth is expected to be in the range of 5% to 7% for fiscal 2024[178]. - Organic operating income growth is anticipated in the range of 6% to 8% for fiscal 2024[178]. Non-GAAP Measures - The company utilizes non-GAAP measures such as "organic change" to assess performance consistently and compare with competitors[103]. - The company has adjusted for transaction, transition, and integration costs related to acquisitions to better understand organic results[102]. - The "Ready-to-Drink" product category has been highlighted due to its significant contribution to growth in recent years[109].