Brown-Forman(BF_B) - 2024 Q3 - Quarterly Report

Financial Performance - Reported net sales of $3.2 billion for the nine months ended January 31, 2024, an increase of 1% compared to the same period last year, driven by favorable price/mix and acquisitions, partially offset by lower volumes [175]. - Reported gross profit of$ 2.0 billion for the nine months ended January 31, 2024, an increase of $98 million, or 5%, with gross margin increasing 2.5 percentage points to 60.9% [175]. - Reported operating income of$ 1.0 billion for the nine months ended January 31, 2024, an increase of 25% compared to the same period last year [175]. - Diluted earnings per share of $1.58 for the nine months ended January 31, 2024, an increase of 32% from$ 1.20 reported for the same period last year [175]. - Reported net sales for the nine months ended January 31, 2024, were $3,214 million, reflecting a 1% increase compared to the prior year [204]. - Gross profit for the three months ended January 31, 2024, was$ 635 million, a 2% increase from the previous year, with a gross profit margin of 59.4% [204]. - Operating income for the three months ended January 31, 2024, was $373 million, a significant increase of 116% compared to the same period last year [204]. - The effective tax rate for the three months ended January 31, 2024, was 16.5%, a decrease of 3.0 percentage points from the previous year [204]. - The effective tax rate for the nine months ended January 31, 2024, was 20.3%, down from 23.0% for the same period last year [225]. - Reported gross profit for the nine months ended January 31, 2024, was$ 2.0 billion, an increase of $98 million, or 5% compared to the same period last year [220]. - Reported gross profit for the three months ended January 31, 2024, was$ 635 million, an increase of $11 million, or 2%, with gross margin rising 1.8 percentage points to 59.4% [250]. Sales Performance by Region - Germany's reported net sales increased 12% driven by the launch of Jack Daniel's & Coca-Cola RTD and acquisitions, partially offset by lower volumes [178]. - Mexico's reported net sales increased 22% driven by higher prices of New Mix and positive foreign exchange effects, partially offset by lower volumes of el Jimador [179]. - Brazil's reported net sales increased 12% led by higher volumes of JDTA and positive foreign exchange effects, partially offset by lower JDTW volumes [179]. - Reported net sales growth in emerging markets and Travel Retail was partially offset by declines in developed international and the United States [173]. - Emerging markets, including Mexico, Poland, and Brazil, showed strong growth with net sales increases of 22%, 24%, and 12% respectively [205]. - Reported net sales in Japan declined 100% due to lower volumes and an estimated net decrease in distributor inventories [207]. - Reported net sales in the Rest of Developed International increased 11%, driven by acquisitions and new product launches [207]. - Travel Retail's reported net sales increased 3%, supported by growth in the super-premium American whiskey portfolio [208]. - JDTA reported net sales increased 44%, attributed to higher volumes in Brazil and a product launch in South Korea [241]. - Reported net sales for JDTW decreased 6%, impacted by declines in multiple regions and an estimated net decrease in distributor inventories [239]. Acquisitions and Divestitures - During the third quarter of fiscal 2024, the company sold its Finlandia vodka business, resulting in a pre-tax gain of$ 90 million [174]. - The company reached an agreement to sell its Sonoma-Cutrer wine business, expected to close in the fourth quarter of fiscal 2024 [180]. - The company acquired the Gin Mare and Diplomático brands, contributing positively to net sales growth and operating income for the nine months ended January 31, 2024 [202]. - Reported net sales for the Rest of Portfolio increased 79%, largely driven by acquisitions [246]. Expenses and Cash Flow - Total operating expenses decreased by 42% for the three months ended January 31, 2024, compared to the same period last year [204]. - Reported operating expenses totaled $918 million for the nine months ended January 31, 2024, a decrease of$ 112 million, or 11%, compared to the same period last year [253]. - Cash flows from operations were $362 million for the nine months ended January 31, 2024, a decline of$ 48 million from the same period last year [259]. - Cash used for financing activities was $212 million during the nine months ended January 31, 2024, compared to$ 468 million in cash provided by financing activities in the prior-year period [260]. - Cash and cash equivalents increased from $374 million at April 30, 2023, to$ 589 million at January 31, 2024 [257]. Future Outlook - The company expects organic net sales to be flat for fiscal 2024, with organic operating income growth anticipated in the 0% to 2% range [256]. - Capital expenditures for fiscal 2024 are planned to be in the range of $230 to$ 240 million [256]. - The Board of Directors authorized a share repurchase program of up to $400 million from October 2, 2023, through October 1, 2024 [261].