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

Financial Performance - For the fiscal year ended April 30, 2024, net sales were $4,178 million, a decrease of 1.2% compared to$ 4,228 million in 2023[36] - Gross profit for the same period was $2,526 million, reflecting an increase of 1.3% from$ 2,494 million in 2023[36] - Operating income increased to $1,414 million in 2024, up 25.5% from$ 1,127 million in 2023[36] - Net income for the fiscal year 2024 was $1,024 million, representing a 30.9% increase from$ 783 million in 2023[36] - Basic earnings per share rose to $2.15 in 2024, compared to$ 1.63 in 2023, marking a 32% increase[36] Cash and Debt Management - Cash and cash equivalents were reported at $446 million, with short-term commercial paper borrowings of$ 429 million exposed to interest rate changes[25] - The company has a committed revolving credit agreement of $900 million, expiring in May 2028, with no borrowings outstanding as of April 30, 2024[77] Shareholder Information - As of April 30, 2024, total shares outstanding are 472,600 thousand, a decrease from 479,316 thousand in 2023, reflecting a reduction of approximately 1.5%[78] - The company has approximately 11,269,000 shares available for issuance under the 2022 Omnibus Compensation Plan as of April 30, 2024[115] Pension and Benefits - The funded status of pension benefits as of April 30, 2024, shows a net liability of$ 103 million, down from $125 million in 2023[86] - The company projects pension benefits of$ 54 million for 2025 and 2026, with a gradual increase to $57 million by 2029[82] - The company has recognized a net actuarial gain of$ 20 million for pension benefits in 2024, following a loss of $29 million in 2023[87] - The total fair value of pension plan assets decreased from$ 606 million as of April 30, 2023, to $576 million as of April 30, 2024[105] Revenue Growth - Revenue from the United States increased from$ 1,917 million in 2022 to $1,968 million in 2023, representing a growth of approximately 2.7%[79] - The total revenue for 2023 was$ 4,228 million, up from $3,933 million in 2022, indicating a year-over-year increase of about 7.5%[80] - Whiskey sales for 2023 reached$ 2,915 million, a rise from $2,756 million in 2022, marking an increase of approximately 5.8%[80] - The company plans to continue expanding its market presence, particularly in emerging markets, where revenue grew from$ 714 million in 2022 to $842 million in 2023, an increase of approximately 17.9%[79] Risks and Challenges - The company faces potential adverse effects from unfavorable economic conditions, including inflation and economic slowdowns, which could reduce consumer demand for its products[117] - The company’s financial results could be negatively impacted by product recalls or liability claims, affecting brand reputation and sales[119] - The company operates in over 170 countries, facing commercial, political, and financial risks that could disrupt business operations and affect stock prices[124] - Tariffs imposed in 2018 negatively impacted the business until they were removed or suspended in late fiscal 2022 and early fiscal 2023, highlighting the vulnerability to international trade policies[125] - The company faces risks related to the availability and cost of raw materials, which could adversely affect financial results if not managed effectively[141] - The company may incur increased costs due to health epidemics or pandemics, which could materially affect operations and financial results[152] - Health epidemics and pandemics pose risks that could materially and adversely affect the company's operations and financial results[151] - The company is significantly dependent on the health of the Jack Daniel's family of brands, which could impact sales and marketing efforts[166] - Changes in consumer preferences and a potential decline in the social acceptability of beverage alcohol could negatively affect business results[158] - The company faces substantial competition from new entrants and consolidations by competitors, which may lead to pricing pressures and affect financial results[166] Regulatory and Compliance - The company is committed to compliance with anti-corruption laws, with potential violations leading to investigations and financial penalties[126] - The company is subject to extensive regulatory requirements that could lead to increased costs or limit business activities[161] - Regulatory changes regarding greenhouse gas emissions and environmental issues could increase operating costs, impacting profitability[154] - The U.S. Inflation Reduction Act of 2022 implemented a 15% minimum tax on book income for large corporations, which could adversely affect the company's effective tax rate and net earnings[155] - Potential changes in global tax rules, including a proposed global minimum tax rate of 15%, could have a material adverse impact on net income and cash flows[162] Operational Challenges - The company experienced supply chain disruptions that increased production costs and constrained product availability, prompting actions to diversify suppliers[143] - Disruptions in the distribution network or inventory fluctuations could negatively affect sales and financial performance[157] - The company may not succeed in its strategies for acquisitions and investments, which could lead to financial losses or integration challenges[148] - The company’s growth strategy relies on product innovation, but there is no assurance that successful new products or line extensions will continue to be developed[160] - The company recorded a$ 7 million impairment charge related to the write-off of an immaterial discontinued brand name during fiscal 2024[97] - The company recognized a non-cash impairment charge of $96 million for the Finlandia brand name during fiscal 2023, primarily due to higher discount rates and input costs[97] Currency Exposure - The company’s net exposure to foreign currency changes is significant, as foreign currency revenues exceed foreign currency expenses, impacting financial results based on the strength of the U.S. dollar[91] - Fluctuations in foreign currency exchange rates relative to the U.S. dollar could materially impact financial results due to the global nature of operations[127]