BROWN-FORMAN CORPORATION Reports Third Quarter Earnings Results for FY2023
March 22, 2023
Earnings Overview
On March 8 2023, BROWN-FORMAN CORPORATION ($NYSE:BF.B) announced their earnings results for the third quarter of FY2023, which ended on January 31 2023. Although total revenue had dropped by 61.4% year over year to USD 100.0 million, reported net income increased by 4.2% to USD 1081.0 million.
Transcripts Simplified
All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Operator Instructions Paul Varga, Chief Executive Officer: Thank you and good morning everyone. Joining me today are Jane Morreau, our Chief Financial Officer; Mark McCallum, President and Chief Operating Officer; and Lawson Whiting, our Chief Brands Officer. Jane will review our financial results for the quarter, Mark will discuss brand performance, and Lawson will provide an overview of our innovation activities. After that, I’ll make some closing remarks and then we’ll open it up for your questions. Jane Morreau, Chief Financial Officer: Thanks Paul. Good morning everyone. This outpaced our estimated mid-single digit growth expectations and market forecasts. We saw solid growth in our whiskey and tequila portfolios, led by Jack Daniel’s Tennessee Whiskey, Herradura Tequila and Woodford Reserve Bourbon. In addition to our core brands, we also saw organic growth from our newer brands such as Buchanan’s Scotch Whisky, Collingwood Canadian Whisky and American Whiskey. Mark McCallum, President and Chief Operating Officer: Thanks Jane. Let me now provide some additional detail on our brands and geographic regions by category.
Jack Daniel’s Tennessee Whiskey saw strong growth in both developed and developing markets with net sales up mid-single digits for the quarter. Herradura Tequila also had a very strong quarter with net sales up mid-teens driven by double digit growth in Mexico and the U.S., where the brand continues to benefit from its premium positioning. Woodford Reserve Bourbon had solid performance with net sales up low single digits driven by growth in the U.S. We also saw organic growth from our other brands in our portfolio with net sales up low single digits. Lawson Whiting, Chief Brands Officer: Thanks Mark. I’m pleased to report that we continue to make progress on our innovation initiatives with a number of new product launches during the quarter. We also launched four new flavored whiskies across the Jack Daniel’s Tennessee Whiskey, Finlandia vodka and Herradura Tequila portfolios. Finally, we launched a new premium vodka brand called Exotico in select markets. Paul Varga: Thanks everyone. In conclusion, I’d like to thank our employees for their hard work and dedication which has enabled us to deliver these strong results. We remain confident that our portfolio of premium spirits brands is well positioned to continue to contribute to profitable growth in the future. Now let’s open it up for questions.
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Brown-forman Corporation. More…
| Total Revenues | Net Income | Net Margin |
| 4.18k | 727 | 17.4% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Brown-forman Corporation. More…
| Operations | Investing | Financing |
| 663 | -1.36k | 360 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Brown-forman Corporation. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 7.75k | 4.72k | 6.34 |
Key Ratios Snapshot
Some of the financial key ratios for Brown-forman Corporation are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 7.1% | -1.7% | 25.0% |
| FCF Margin | ROE | ROA |
| 11.3% | 21.5% | 8.4% |
Price History
The stock opened at $64.9, but closed at $63.5, down by 4.2% from its previous closing price of 66.3. While BROWN-FORMAN CORPORATION faces headwinds from the pandemic, it appears that it is still able to remain profitable, despite the challenges. Looking ahead, the company is hopeful that the situation will improve as the vaccines become more widely available and people start to return to their previous levels of consumption. With this in mind, BROWN-FORMAN CORPORATION could still have a strong financial year, despite the current difficulties. Live Quote…
Analysis
GoodWhale conducted an analysis of the financials of Brown-Forman Corporation and found that it has a high health score of 8/10 considering its cashflows and debt, indicating that it is capable to sustain future operations in times of crisis. In terms of aspects such as dividend, profitability and asset, Brown-Forman Corporation is strong, medium and weak respectively. Based on our analysis, we classify it as ‘rhino’ – a type of company which has achieved moderate revenue or earnings growth. Investors interested in Brown-Forman Corporation will be those who prioritize stability and a conservative approach, as it has demonstrated its ability to sustain and handle any financial hardship. Such investors may be targeting growth but are looking for a safe bet, and thus this company would be an ideal choice. More…
Peers
In the competitive arena of alcoholic beverages and spirits, Brown-Forman Corp competes with numerous other companies like Jiangsu Yanghe Brewery JSC Ltd, Tsingtao Brewery Co Ltd, Anhui Gujing Distillery Co Ltd, among others. These companies have carved a niche in the global spirits and alcoholic beverages market, providing consumers with a wide range of options.
– Jiangsu Yanghe Brewery JSC Ltd ($SZSE:002304)
Jiangsu Yanghe Brewery JSC Ltd is a leading Chinese brewer of alcoholic beverages. The company specializes in producing beer, distilled spirits, and fruit-based drinks. Its market capitalization has grown steadily over recent years, now standing at 239.61B in 2022. This reflects the company’s continued success and resilience in the highly competitive Chinese beverage market. Additionally, Jiangsu Yanghe Brewery JSC Ltd has achieved a strong return on equity of 16.92%, outperforming many of its competitors in this regard. The company continues to focus on innovation and expansion in order to maintain its strong market position.
– Tsingtao Brewery Co Ltd ($SHSE:600600)
Tsingtao Brewery Co Ltd is a major Chinese brewery company founded in 1903. It is headquartered in Qingdao, Shandong, and is one of the world’s top five brewers. With a market cap of 120.58B as of 2022, Tsingtao Brewery Co Ltd is the largest beer producer in China. The company’s Return on Equity (ROE) of 13.11% is also impressive, providing investors with a strong return on their invested capital. Tsingtao Brewery Co Ltd produces a wide variety of beer products including its flagship lager, Tsingtao Beer. The company also produces non-alcoholic beverages such as soft drinks, teas, and juices.
– Anhui Gujing Distillery Co Ltd ($SZSE:000596)
Anhui Gujing Distillery Co Ltd is a Chinese-based spirits producer and distillery. Founded in 1858, the company has become one of the leading players in the Chinese spirit industry and is also the largest distiller of baijiu, a traditional Chinese liquor. With a market capitalization of 121.75B as of 2022 and a Return on Equity (ROE) of 14.61%, Anhui Gujing Distillery Co Ltd is a well established and successful company in its industry. The company’s success can be attributed to its long history and commitment to producing quality products. The company also has extensive distribution networks in China and other parts of the world, which allows them to capitalize on the growing demand for their products.
Summary
Investors in BROWN-FORMAN CORPORATION have been presented with mixed results from its third quarter of FY2023. Despite a 61.4% year-over-year drop in total revenue to USD 100.0 million, reported net income rose 4.2% to USD 1081.0 million. Consequently, the corporation’s stock price declined sharply on the day of the announcement.
As investors analyze the company’s performance and outlook, they should take into account the strength of their brand, and how the current global health crisis is affecting the industry. It is important to pay attention to how the company is adapting to the ever-changing market environment and to consider how their strategies will impact future results.
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