Brown Forman Corporation (BF.B, Financial) released its fourth-quarter fiscal 2020 results on June 9 before the market opened. While the company’s earnings missed projections, revenue topped expectations.
Key metrics
The maker of Jack Daniel’s and other alcohol products recorded earnings per share of 27 cents in the fourth quarter, down 20% from the year-ago period. Analysts had predicted EPS of 28 cents. Revenue of $709 million was down 5% year-over-year but surpassed analysts’ expectation of $695.17 million.
Brown Forman’s President and CEO Lawson Whiting had the following to say:
“Brown-Forman has endured and prevailed through many challenges over the last 150 years. We believe we are well positioned to successfully navigate the environment we face today and emerge stronger thanks to the continued support of our shareholders, including the Brown family, our healthy balance sheet, the resilience of our people, and the strength of our brands.”
On-premise and off-premise channels
Brown Forman’s on-premise channel, which makes up 20% of its worldwide business, saw sales decline during the quarter, driven by the impact of the coronavirus outbreak.
On the other hand, off-premise and e-premise channels experienced robust growth in most of the developed markets due to a rise in at-home consumption and pantry loading.
How did the brands fare?
The premium bourbon brands Woodford Reserve and Old Forester witnessed underlying sales growth of 21%.
Tequila brands registered sales growth of 2% on a global basis. The growth was attributable to strong underlying sales growth of Herradura (up 7%) and el Jimador (up 5%).
Sales of Brown Forman’s non-branded business, which include used barrels, bulk whiskey and contract bottling, dipped 29% courtesy of demand slump as well as lower pricing. Lower bulk whiskey sales also contributed to the decline.
Geographically, sales in the U.S., the company’s largest market, rose 5% in fiscal 2020, partially driven by the introduction of Jack Daniel’s Tennessee Apple in the fall of 2019. Sales in developed international and emerging markets plunged 1% each.
Financials
At the end of fiscal 2020, the company had cash and cash equivalents of 680 million and long-term debt of $2.27 billion.
The company earned 720 million in cash from operating activities during fiscal 2020.
Outlook
Brown Forman pulled its guidance for fiscal 2021, citing the global uncertainty caused by the coronavirus pandemic.
Disclosure: I do not hold any positions in the stocks mentioned.
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