BF.B Brown Forman Corp

Brown-Forman Corp.(BF.B) recorded fiscal 2012 first-quarter earnings of 81 cents a share compared with 76 cents a share in the year-ago quarter. However, earnings missed the Zacks Consensus Estimate of 83 cents a share. The robust increase in quarterly earnings was primarily driven by strong top-line growth and strong volume growth.

Quarterly Details

Brown-Forman's net sales recorded a growth of 13.0% to $840.3 million from $744.9 million in the prior-year quarter. The growth was primarily attributable to solid performance in Germany, Turkey, the U.K., Russia, and Brazil more than offset declines in Poland, Spain, and Australia. Total Revenue beat the Zacks Consensus Estimate of $769 million.

During the quarter, Brown-Forman's gross profit grew 11.0% from the prior-year quarter to $378.8 million, while gross margin decreased 90 basis points (bps) year over year to 50.0%. Advertising expense fell 19.0% year over year to $76.3 million.

Selling, general and administrative expenses inched up 5.0% year over year to $139.0 million. Conversely, Brown-Forman's operating profit surged 8% from the prior-year quarter to $185.9 million, while operating margin contracted 100 times to 22.0% from the prior-year period.

Balance Sheet & Cash Flow

Brown-Forman ended the quarter with cash and cash equivalents of $552.5 million and long-term debt of $505.1 million compared with $567.1 million and $504.5 million in the prior-year quarter, respectively.

In the quarter, Brown-Forman generated $64 million of cash from operations and deployed $46.4 million for dividend payout, and $6.2 million on capital expenditures. The company repurchased up to $15.0 million of Class A and Class B shares, out of $250.0 million share repurchase program which expires on November 30, 2011.

Dividend

During the quarter, Brown-Forman paid a regular quarterly cash dividend of 32 cents a share on Class A and Class B common stock.

Guidance and Zacks Consensus

Moving forward, Brown-Forman anticipates moderate improvement in global economic conditions and customer trends in fiscal 2012. Accordingly, the company has delivered its earnings guidance in the range of $3.45 to $3.85 per share.

Brown-Forman, which competes with Constellation Brands Inc. (STZ) and Diageo plc (DEO), currently holds a Zacks #2 Rank, implying a short-term Buy rating on the stock. Besides, the company retains a long-term 'Outperform' recommendation on the stock

 
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