Driven by solid top-line growth, prudent cost management and
lower effective tax rate,
) reported strong financial results for the fourth quarter and full
fiscal 2014, wherein its bottom-line result for both the periods
registered a robust year over year improvement as well as surpassed
the Zacks Consensus Estimate.
Earnings for the fourth quarter came in at 62 cents per share,
rising 17% year over year and beating the Zacks Consensus Estimate
of 59 cents per share. Moreover, the company's fiscal 2014 earnings
soared 11% year over year to $3.06 per share and were ahead of the
Zacks Consensus Estimate of $3.02 per share.
Net sales for the fourth quarter increased 3% year over year to
$893 million. Moreover, after deducting excise taxes, sales came in
at $689 million, up 4.4% from the prior-year figure of $660
million. The rise was primarily driven by strong demand for whiskey
across the regions where the company operates along with its
geographical expansion initiatives. The Zacks Consensus Estimate
for the quarter was $703 million.
Net sales for the full fiscal increased 4% year over year to
$3,946 million. Moreover, after deducting excise taxes, sales came
in at $2,991 million, up nearly 5% from the prior-year figure of
$2,849 million. The Zacks Consensus Estimate for the quarter was
Quarter in Detail
In the quarter, Brown-Forman's gross profit increased 7% to $493
million from $460 million in the year-ago comparable quarter
primarily due to lower cost of sales as well as lesser excise tax
paid. Consequently, gross margin improved 210 basis points (bps) to
Selling, general and administrative expenses (SG&A)
increased 15% from the year-ago quarter to $207 million while
advertising expenses increased 7% year over year to $166
Operating profit rose 7% year over year to $189 million from
$177 million in the prior-year period. Operating margin expanded 70
bps to 21.1% from 20.4% in the year-ago quarter as the benefit from
improved gross margin was partially offset by higher operating
expenses as a percentage of net sales.
Balance Sheet & Cash Flow
Brown-Forman ended the fiscal with cash and cash equivalents of
$437 million and long-term debt of $997 million. During fiscal
2014, Brown-Forman, which competes with
), generated $649 million of cash from operations, against $537
million in the previous fiscal. During the fiscal, the company
returned $280 million to shareholders through dividend payments of
$233 million and share repurchase worth $47 million.
Fiscal 2014 Guidance
Bolstered by better-than-expected fiscal 2014 performance,
Brown-Forman expects the growth story to continue in Fiscal 2015
driven by solid worldwide demand for American whiskey. Therefore,
the company anticipates the underlying and reported sales will grow
in the range of 6% to 8% in fiscal 2015.
Moreover, operating income is expected to increase in the band
of 9% to 11% on an underlying as well as reported basis. Based on
the above expectations, the company projected earnings to be in the
band of $3.25 to $3.45 per share for fiscal 2015. Currently, the
Zacks Consensus Estimate for Brown-Forman stands at $3.30 per
Other Stocks to Consider
Currently, Brown-Forman carries a Zacks Rank #4 (Sell). However,
some better-placed stocks in the beverages-alcohol industry are
Constellation Brands Inc.
Molson Coors Brewing Co.
), both carrying a Zacks Rank #2 (Buy).
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