Brown-Forman(BF_B) - 2024 Q4 - Annual Results

Financial Performance - For fiscal 2024, reported net sales decreased 1% to $4.2 billion, with an organic basis decline of 1%[25] - Reported operating income increased 25% to$ 1.4 billion, while organic operating income decreased by 2%[25] - Diluted earnings per share rose 32% to $2.14, reflecting strong operating performance[25] - The company anticipates organic operating income growth in the range of 2% to 4% for fiscal 2025[14] - The company returned$ 804 million to stockholders through dividends and share repurchase programs[29] - For the three months ended April 30, 2024, reported net sales decreased by 8% compared to the prior year, with organic net sales down by 5%[70] - Gross profit reported a decrease of 10%, while organic gross profit declined by 8% for the same period[70] - Operating income increased by 26%, with an organic change in operating income showing a decrease of 16%[70] - The company recognized a pre-tax gain of $175 million from the sale of its Sonoma-Cutrer wine business, along with$ 50 million in cash[79] - The company sold its Finlandia vodka business, resulting in a pre-tax gain of $92 million[97] Sales and Market Performance - The Tequila portfolio reported net sales decline of 4% (-7% organic), with Herradura's sales down 10% (-13% organic)[6] - Emerging markets saw reported net sales growth of 5% (+8% organic), driven by strong performance in Mexico and Brazil[9] - Whiskey depletions decreased by 2% to 21.7 million cases, with a reported net sales decline of 3%[49] - Ready-to-Drink category saw a 3% decrease in depletions to 21.0 million cases, with net sales growth of 2%[49] - Tequila depletions fell by 11% to 2.3 million cases, resulting in a 4% decline in net sales[49] - Vodka depletions decreased by 6% to 1.2 million cases, with a significant net sales drop of 16%[49] - The total portfolio's other brand depletions aggregated to 48.8 million cases, reflecting a 2% decrease[49] - The United States market experienced a reported net sales decline of 4%, with organic sales also down by 4%[73] - Emerging markets reported a net sales increase of 5%, with organic sales growth of 8%[73] Expenses and Investments - Gross profit increased 1% (+2% organic) with gross margin expansion of 150 basis points to 60.5%[10] - Reported advertising expense grew 4% (+2% organic), reflecting increased investment in key brands[34] - Advertising expenses reported a decrease of 14%, while organic advertising expenses decreased by 12%[70] - Capital expenditures are planned to be between$ 195 million and $205 million for fiscal 2025[15] Community and Corporate Responsibility - The company committed$ 23 million to the Brown-Forman Foundation and Dendrifund to support community initiatives[58] Acquisitions and Strategic Moves - The acquisition of Diplomático Rum and related assets occurred during the third quarter of fiscal 2023, impacting future performance metrics[55] Financial Position and Assets - Total assets increased from $7,777 million in April 2023 to$ 8,166 million in April 2024[67] - Cash and cash equivalents rose from $374 million in April 2023 to$ 446 million in April 2024[67] - Total liabilities increased from $4,509 million in April 2023 to$ 4,649 million in April 2024[67] - Cash dividends paid per common share increased from $0.2055 in 2023 to$ 0.2178 in 2024[65] - The company reported a 29% increase in income before income taxes, rising from $269 million in 2023 to$ 347 million in 2024[65] Inventory and Demand Insights - The estimated net change in distributor inventories showed a decrease of 4% in the United States and 12% in emerging markets[75] - The company provides information on estimated fluctuations in distributor inventories, particularly in the United States, which is crucial for understanding performance and trends[101] - The estimated net change in distributor inventories is calculated to provide insights into actual consumer demand versus shipments[115] - The depletion-based amount is calculated to assess the impact of inventory changes on organic net sales[116] Employee and Global Operations - The company operates globally with approximately 5,700 employees and sells products in over 170 countries[63] Brand Performance - The Jack Daniel's family of brands continues to be a significant contributor, with various expressions showing mixed performance in sales trends[96] - The company categorizes its whiskey products, including brands like Jack Daniel's, Woodford Reserve, and Old Forester, which are significant contributors to net sales[107] - The "Ready-to-Drink" category includes products such as Jack Daniel's RTD and RTP, indicating a growing segment in the portfolio[109] - Organic change measures are used to assess performance consistently and compare with competitors[59]