) fiscal first-quarter 2014 (ended Jul 31, 2013) earnings of 66
cents a share lagged the Zacks Consensus Estimate of 72 cents.
Moreover, earnings declined 4.3% from 69 cents reported in the
year-ago quarter. The year-over-year decline in the bottom line
was primarily due to higher input costs and increase in operating
Net sales inched up 2% year over year to $896 million
primarily due to the strong demand of whiskey across all regions
in which the company operates. On an underlying basis, the
company's net sales increased 5%. Moreover, the quarterly sales
were well above the Zacks Consensus Estimate of $705 million.
During the quarter, Brown-Forman's gross profit increased 3%
to $477 million from $464 million reported in the year-ago
quarter. Gross margin expanded 40 basis points (bps) to 53.3%
compared with 52.9% in the prior-year period, primarily due to
increased sales and lower excise taxes as a percentage of
Selling, general and administrative expenses (SG&A) rose
5% from the year-ago quarter to $156 million. Advertising
expenses surged 12% year over year to $103 million.
Operating profit during the quarter inched down 2% to $211
million from $217 million in the prior-year period.
Operating margin contracted 100 bps to 24.2% compared with
25.2% in the year-ago quarter, primarily due to higher SG&A
and advertising expenses.
Balance Sheet & Cash Flow
Brown-Forman, which has a Zacks Rank #3 (Hold), ended the
quarter with cash and cash equivalents of $217 million and
long-term debt of $997 million. During the quarter, Brown-Forman,
which competes with
Constellation Brands Inc.
), generated $93 million of cash from operations and deployed $54
million toward dividend payout.
Fiscal 2014 Guidance
Going forward, Brown-Forman reaffirmed its fiscal 2014
outlook. The company still expects fiscal 2014 earnings in the
range of $2.80-$3.00 per share. Moreover, the company projects
operating income to increase in the range of 9%-11%, while
underlying sales are expected to rise in the high-single-digit
Other Stocks to Consider
The other stock worth considering in the beverages-alcoholic
Boston Beer Company Inc.
), which carries a Zacks Rank #1 (Strong Buy).
BEAM INC (BEAM): Free Stock Analysis Report
BROWN FORMAN B (BF.B): Free Stock Analysis
BOSTON BEER INC (SAM): Free Stock Analysis
CONSTELLATN BRD (STZ): Free Stock Analysis
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