Why Jack Daniel's Parent Brown-Forman Shares Are Tumbling Today

Brown-Forman Corp (NYSE: BF-B) (NYSE: BF-A) reported Q2 FY24 sales growth of 1% Y/Y to $1.11 billion, missing the analyst consensus of $1.15 billion.

The gross margin expanded to 60.6% from 56.0% a year ago. The operating margin rose to 30.6% from 28.7% the prior year, and operating income for the quarter increased 8% Y/Y to $339 million.

EPS of $0.50 missed the analyst consensus of $0.51.

The company held $373 million in cash and equivalents as of October 31, 2023. Cash provided by operating activities totaled $97 million YTD.

Lawson Whiting, President and Chief Executive Officer, said, "While we grew at a slower pace than anticipated, we delivered strong gross margin expansion and continued to invest strongly behind our brands. We continue to believe our premium portfolio and broad geographic footprint will position us for accelerated growth in the second half of the fiscal year."  

On November 16, 2023, the Board of Directors approved a 6% increase in the quarterly cash dividend to $0.2178 per share, payable on January 2, 2024, to stockholders of record as of December 1, 2023.

On October 2, 2023, Brown-Forman Board authorized the repurchase of up to $400 million (exclusive of brokerage fees and excise taxes) of outstanding shares of Class A and Class B common stock from October 2, 2023, through October 1, 2024, subject to market and other conditions. 

As of November 30, 2023, the company had about $181 million remaining under the program.

FY24 Outlook: Brown-Forman revised guidance for organic net sales growth to 3%-5% (from 5%-7%) and organic operating income growth to 4%-6% (from 6%-8%).

The company continues to expect an FY24 capital expenditure of $250 million-$270 million.

The company stated that evolving global macroeconomic conditions continue to create a challenging operating environment, curbing their expectations.

Price Action: BF-B shares are down 9.86% at $54.29 on the last check Wednesday.

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