Brown-Forman Corp
(NYSE:BF.B)
$
26.75
-0.76 (-2.76%)
Market Cap: 12.34 Bil
Enterprise Value: 14.48 Bil
PE Ratio: 17.26
PB Ratio: 3.09
GF Score: 69/100 
Q1 2027 Brown-Forman Corporation Earnings Call Transcript
Sep 02, 2026 / 02:00PM GMT
Release Date Price:
$27.38
(+3.87%)
Key Points
Positve
- Innovation is driving meaningful growth, with strong momentum from New Mix, the RTD portfolio, and Jack Daniel's Tennessee Blackberry, which contributed over 2 points of value growth in the US.
- The RTD portfolio is performing exceptionally well, contributing approximately 1 point of value growth to overall US performance and expanding into new markets and flavors.
- Emerging international markets delivered 9% organic net sales growth, led by Mexico and the UAE, showcasing strong growth opportunities outside developed markets.
- Gross margin expanded 40 basis points to 60.2%, driven by lower costs and favorable portfolio changes, while organic operating income increased 4%.
- Cash flow performance was strong, with cash flow from operations increasing to $173 million and free cash flow rising to $161 million, supported by lower capital spending.
- The company reaffirmed its fiscal 2027 outlook and expressed increased confidence in trending towards the more favorable end of the organic operating income guidance range.
- Jack Daniel's Tennessee Whiskey provided stability with essentially flat organic net sales, and the company sees the US whiskey category as healthier than general sentiment suggests.
- The company is taking disciplined actions to manage costs and simplify the organization, expecting SG&A to decline as benefits from these actions materialize.
- Strong balance sheet and healthy free cash flow support continued investment in the business, dividends, and strategic opportunities, including the successful launch of premium expressions like Jack Daniel's Single Barrel Heritage Barrel.
- The company is successfully managing inventory levels more efficiently than competitors, allowing for strategic product innovations and positioning for future growth.
Negative
- Organic net sales for nonbranded and bulk business, specifically used barrel sales, declined more than 60%, with demand from scotch and Irish whiskey producers remaining well below historical highs.
- The full-strength tequila portfolio, including Herradura and el Jimador, declined in the low teens, with performance remaining well below desired levels despite some early signs of improvement.
- Developed international markets saw organic net sales decline 8%, with particularly weak conditions in Germany, France, and the UK, where consumer demand remains soft.
- The operating environment in the US remains challenging, with the overall spirits market declining and consumer takeaway trends for major brands not yet improving.
- Foreign exchange, particularly the stronger Mexican peso, remained a headwind to gross margin, and continued growth of lower-margin RTDs is expected to pressure product mix.
- Higher cost whiskey inventory, produced during a period of elevated inflation, will become a larger factor in results as the year progresses, pressuring gross margins.
- The company expects continued pressure on used barrel sales, though the year-over-year dollar impact is expected to moderate through the remainder of the year.
- Organic advertising expense declined 4% due to timing, and SG&A increased 5% due to costs associated with organizational changes, reflecting ongoing investment pressures.
- In Canada, US-produced spirits remain off the shelves in most provinces, with restrictions expected to remain in place for the balance of the fiscal year.
- The travel retail channel declined 1% during the quarter, with passenger traffic in key corridors, particularly parts of the Middle East, remaining below historical levels.
Operator
Good day and thank you for standing by. Welcome to the Brown-Forman Corporation first-quarter fiscal-year 2027 earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your speaker today, Sue Perram, Vice President, Director, Investor Relations. Ma'am, please go ahead.
Sue Perram
Brown-Forman Australia Pty Ltd - Director - Investor Relations
Thank you and good morning, everyone. I would like to thank each of you for joining us today for Brown-Forman's first-quarter fiscal-year 2027 earnings call. Joining me today are Lawson Whiting, President and Chief Executive Officer; and Jim Peters, Executive Vice President and Chief Financial Officer.
This morning's conference call contains forward-looking statements based on our current expectations. Numerous risks and uncertainties may cause actual results to differ materially from those anticipated or projected in these statements. Many of the factors that will determine future results are beyond the
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