Financial Performance - In fiscal 2023, net sales decreased by 5%, with a notable decline in developed international markets by 6% and emerging markets by 11%[10] - The operating income saw a significant drop of 10%, indicating challenges in maintaining profitability amidst declining sales[10] - Reported net sales for the third quarter decreased 1% to 1.1billion,witha2373 million, with a 5% increase on an organic basis[39] - Diluted earnings per share rose 189% to 0.60[39]−Forthefirstninemonthsoffiscal2024,reportednetsalesincreased13.2 billion, with flat organic growth compared to the prior year[49] - Year-to-date reported operating income rose 25% to 1.0billion(+21.58[49] - Net sales for the three months ended January 31, 2024, were 3,214million,a13,182 million in the same period of 2023[83] - Operating income rose by 25% to 1,039millionin2024,upfrom829 million in 2023, leading to an operating margin of 32.3%[83] - Net income for the three months ended January 31, 2024, was 758million,a32576 million in 2023[83] - Basic earnings per share increased by 32% to 1.59in2024,comparedto1.20 in 2023[83] Brand Performance - The company reported a non-cash impairment charge of 96millionfortheFinlandiabrandnameduringthethirdquarteroffiscal2023[21]−ThecompanysolditsFinlandiavodkabusiness,resultinginapre−taxgainof90 million, with related transition services agreements in place[15] - The "Ready-to-Drink" product category was highlighted as a significant growth contributor, reflecting industry-wide trends[9] - New Mix brand achieved reported net sales growth of 34% (+17% organic)[40] - Jack Daniel's Tennessee Apple achieved reported net sales growth of 44% (+45% organic), while Jack Daniel's Tennessee Whiskey saw a decline of 6% (-5% organic)[51] - Whiskey product net sales declined 2% (-1% organic), primarily due to lower volumes for Jack Daniel's Tennessee Whiskey and Jack Daniel's Tennessee Honey[43] - Emerging markets reported net sales growth of 9% (+11% organic), driven by strong performance in Mexico and Brazil[44] - The recently acquired brands, Gin Mare and Diplomático, contributed to a 79% increase in Rest of Portfolio's reported net sales growth (+11% organic)[50] Cost and Expenses - The gross profit margin decreased by 5%, reflecting increased costs and competitive pressures in the market[10] - Reported gross profit increased 5% (+6% organic) with a gross margin expansion of 250 basis points[41] - Advertising expenses increased by 11% (+7% organic) to support long-term brand investment[41] - Advertising expenses rose by 11% to 414millionin2024,upfrom372 million in 2023[83] - The effective tax rate decreased to 20.3% in 2024 from 23.0% in 2023[83] - The effective tax rate for fiscal 2024 is expected to be in the range of approximately 20% to 22%[58] Strategic Initiatives - The acquisition of Gin Mare Brand, S.L.U. and related entities occurred in the third quarter of fiscal 2023, with adjustments made for transaction and integration costs[13] - The company authorized a share repurchase program of up to 400million,completedasofDecember31,2023[47]−Thecompanycompleteda400 million share repurchase program as of December 31, 2023[52] - The transition to owned distribution in Japan is set for April 1, 2024, following a significant inventory build[45] - Capital expenditures are now planned to be between 230millionand240 million[76] - A regular quarterly cash dividend of 0.2178persharewasdeclared,payableonApril1,2024[74]MarketOutlook−Thecompanyanticipatescontinuedmarketexpansion,particularlyinemergingmarketssuchasMexico,Poland,andBrazil[25]−Thecompanyaimstoprovideguidancefororganicchangeincertainmeasures,excludingtheimpactofforeignexchangefluctuations[22]−Thecompanyemphasizestheimportanceofunderstandingdistributorinventoryfluctuations,particularlyintheU.S.market,togaugecustomerdemand[23]−Organicnetsalesareanticipatedtobeflat,withexpectedorganicoperatingincomegrowthintherangeof063 million in 2024, a significant improvement from a cash used of $1,300 million in 2023[87]
