Jack Daniels Investors Take a Bottoms Up Approach to Q1 Earnings

Source: Streetwise Reports   09/02/2020

Shares of Brown-Forman Inc., parent company of Jack Daniels Tennessee Whiskey, traded 10% higher after the firm reported Q1/21 financial results that showed a 74% increase in YoY net income.

Brown-Forman Corp. (BF/A:NYSE; BF/B:NYSE) today announced financial results for its first quarter of fiscal 2021.

The firm reported that net sales in Q1/21 decreased by 2% to $753 million, compared to $766 million in Q1/20. The company additionally indicated that operating income in Q1/21 increased by 56% to $387 million, versus $248 million in Q1/20 and during the same corresponding period diluted earnings per share (EPS) grew by 73% to $0.67, compared to $0.39 in Q1/20. The company advised that diluted EPS gain included an estimated $0.19 per share gain from the sale of Canadian Mist, Early Times and Collingwood brands along with an $0.08 per share tax related benefit.

The company’s President and CEO Lawson Whiting commented, “I am very pleased with our performance at the start of this fiscal year and thankful to our 4,800 employees worldwide who made these results possible…Despite being faced with significant ongoing challenges, our business performed well during the quarter though much uncertainty remains in the current environment. We believe we are well positioned to navigate the headwinds we face today and emerge from the COVID-19 environment in a stronger position.”

The firm reported that in Q1/21, “U.S. and developed international markets grew underlying net sales 9% (+3% reported) and 12% (+13% reported), respectively, while underlying net sales in emerging markets declined 3% (-20% reported).”

The company stated that in Q1/21, “the Jack Daniel’s family of brands provided positive underlying net sales growth driven by Jack Daniel’s RTDs, the ongoing launch of Jack Daniel’s Tennessee Apple, and broad-based volume growth from Jack Daniel’s Tennessee Honey.”

The firm noted that its premium bourbon brands portfolio, which includes Woodford Reserve and Old Forester, continued to enjoy double-digit underlying net sales growth. The company mentioned that its tequila brands also achieved strong underlying net sales growth led by higher volumes of New Mix that was supported by increased consumer demand in Mexico.

The company advised that due to the current general market uncertainty due to the coronavirus pandemic it is unable to provide quantitative guidance for FY/21. The firm’s EVP and CFO Jane Morreau remarked, “We believe that we continue to be in a strong financial position and that our capacity to generate solid operating cash flows remain sound.”

Brown-Forman Corp’s Class B shares have a market capitalization of around $22.5 billion with approximately 309.3 million shares outstanding. The firm’s Class A shares offer an additional $11 billion in market cap and the company has an enterprise value of approximately $35.5 billion. BF/B shares opened relatively unchanged today at $73.22 (+$0.62, +0.85%) over yesterday’s $72.60 closing price and reached a new 52-week high price this morning of $83.40. The stock has traded today between $73.96 and $83.40 per share and is currently trading at $79.80 (+$7.20, +9.92%).

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