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A Look at Brown Forman's 1st Half of Fiscal 2021

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GuruFocus.com
·2 min read
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- By Mayank Marwah

Brown Forman Corporation (NYSE:BF.B) released its second-quarter fiscal 2021 results on Dec. 8 before the market opened. While revenue surpassed the Zacks Consensus Estimates, earnings lagged projections.

Quarterly numbers

The maker of Jack Daniel's and other alcohol products recorded earnings per share of 50 cents in the second quarter, up 15% from the year-ago period. Analysts had predicted EPS of 51 cents. Revenue of $985 million was slightly lower than the $989 million reported last year, but surpassed analysts' expectations by 1.85%.


Brown Forman's President and CEO Lawson Whiting had the following to say:


"We continue to be pleased with our underlying top-line growth in the first half. Notably, our business accelerated in the second quarter amidst an unprecedented environment. These results are a testament to the resilience of our people, the strength of our brands, and the agility that so many before us today have demonstrated over the company's last 150 years."



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, which it attributes to the impact of the coronavirus outbreak.

On the other hand, off-premise and e-premise channels experienced robust growth in most developed markets due to a rise in at-home consumption and pantry loading.

Key 1st-half highlights

The premium bourbon brands Woodford Reserve and Old Forester witnessed underlying sales growth of 22% in the first half of fiscal 2021.

Tequila brands registered underlying sales growth of 13% on a global basis. The growth was attributable to strong underlying sales growth of el Jimador, which more than offset declines in the Herradura net sales (down 2%).

Sales of Brown Forman's non-branded business, which include used barrels, bulk whiskey and contract bottling, dipped 33% courtesy of demand slump from small businesses as well as lower pricing.

Geographically, sales in the U.S., the company's largest market, rose 9%, partially driven by the introduction of Jack Daniel's Tennessee Apple in the fall of 2019. Sales in developed international markets were up 10%, while sales in emerging markets were flat year-over-year.

Financials and dividend

At the end of quarter, the company had cash and cash equivalents of $964 million and long-term debt of $2.31 billion.

The Board of Directors of the company announced a quarterly cash dividend of $0.1795 per share on Class A and Class B common stock, which would be payable on Jan. 4, 2021. This marks the 76th year of dividend payments.

Guidance

Brown Forman pulled its guidance for fiscal 2021.

Disclosure: I do not hold any positions in the stocks mentioned.

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This article first appeared on GuruFocus.