What You Need to Know About Brown-Forman's Earnings Release

Shares of Brown-Forman are up following lip-smacking results. Here's what you need to know.

Mar 7, 2014 at 11:02AM

Spirits maker Brown-Forman (NYSE:BF-B) reported earnings on Wednesday. Here's what you need to know about the company's recent performance.

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Results recap
Brown-Forman's fiscal third-quarter organic net sales grew 5% to $1.1 billion. Profits for the maker of Finlandia and Jack Daniel's jumped by 14% to $0.82 per share. Analysts expected sales of $1.1 billion and earnings of $0.76 a share. The alcoholic beverage maker also boosted its earnings outlook for next quarter, saying that it now expects to earn approximately $3 per share for its full fiscal year. Shares of the company were up immediately following the announcement. 

Whiskey and vodka spike sales growth
Net sales increased 7% year to date for the first nine months of fiscal 2014. Brown-Forman enjoyed solid growth in many of its key brands, including a 10% jump in Jack Daniel's trademark brand. Jack Daniel's innovative Tennessee Honey grew a lip-smacking double digits. The popular Jack Daniel's brand has attained a spot on the Interbrand Best Global Brands list every year since the list's 2000 inception and climbed 7% in brand value last year. Brown-Forman's superpremium whiskey brands also spiked growth. Underlying sales grew by 16%, including a mouthwatering 27% jump from Woodford Reserve. The company's Finlandia's vodka brands grew sales by 9%.

Recipe for future growth
The Louisville-based company is hinging its future success on the surging popularity of brown liquor and important emerging markets. Its Jack Daniel's enjoyed 32% growth in Latin America in 2012, and Finlandia is the No. 1 imported premium vodka brand in Russia. Vying for a piece of the growing flavored-brown-spirits market, Brown-Forman's Tennessee Honey grew net sales 99% globally last year. Yet that still represents just 7% of Jack Daniel's sales. This spring Brown-Forman will open a new whiskey barrel-making facility in order to meet growing demand for its Jack Daniel's, which the company produced more than 11 million cases of last year.

But the spirits maker's success won't come without a brawl from rivals, especially U.K.-based Diageo. Last year, the competitor upped its stake in India's United Spirits, giving it the leading position in the world's largest whiskey market. In fact, Diageo sells a mind-boggling six bottles of Johnnie Walker worldwide every second.

Foolish takeaway
Despite the competitive alcoholic-beverage landscape, Brown-Forman boasts plenty of attractive growth opportunities. The liquor maker's commitment to leverage its great brands and successfully increase its presence in emerging markets is reflected in the company's strong quarterly and year-to-date results. For the patient, long-term investor, Brown-Forman embraces a lot to be giddy about.

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Nicole Seghetti has no position in any stocks mentioned. Follow her on Twitter @NicoleSeghetti. The Motley Fool recommends Diageo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Jun 12, 2015 at 5:01PM

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