[ACCESSWIRE]
LONDON, UK / ACCESSWIRE / December 14, 2016 / Active Wall St. announces its post-earnings coverage on Brown-Forman Corp. (NYSE: BF-A) (NYSE: BF-B). The Company posted its second quarter fiscal 2017 (Q2 FY17) earnings on December 07, 2016. The Louisville, Kentucky-based company's net sales fell 3% y-o-y; however diluted EPS grew 3% y-o-y. Register with us now for your free membership at: http://www.activewallst.com/register/.
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Earnings Reviewed
During the Q2 FY17, Brown-Forman's reported net sales of $830 million compared to $854 million in Q2 FY16. Net sales number for Q2 FY17 came in marginally below market expectations of $834.4 million. Moreover, the company's sales, before excise taxes, were $1.06 billion, down 4% from $1.10 billion recorded in the prior year's same quarter. However, on an underlying basis the company sales reported a 3% y-o-y growth.
The producer and distributor of premium alcoholic beverages reported net income of $197 million, $0.50 per diluted share in Q2 FY17, compared to$200 million, or $0.49 per diluted share, in the prior year's comparable quarter. The company's net income came in in-line with consensus estimates of $0.50 per diluted share.
Operating Metrics
The company's Q2 FY17 gross profit was $552 million compared to $586 million in the previous year's same quarter. Gross margin as a percentage of net sales for Q2 FY17 fell to 66.5% from 68.6% in Q2 FY16. In the reported period, acquisitions & divestitures (A&D) activity impacted the gross margin by 1.4%, while foreign currency translation impacted gross profit margin by 60 basis points.
In Q2 FY17, advertising expenses was $107 million, down from $115 million reported in the year ago same quarter. The company spent $163 million on selling, general, and administrative expenses in the reported quarter, which was 5% lower than $171 million spent in the year ago quarter. Furthermore, operating income fell during Q2 FY17 to $291 million, or 35.1% of net sales, from $302 million, or 35.4% of net sales, in Q2 FY16. However, operating income grew 8% y-o-y on an underlying basis.
Balance Sheet
For the first six months of FY17, the company's cash provided by operating activities was $169 million compared to $161 million in the previous year's comparable period. As on October 31, 2016, the company had cash and cash equivalents balance of $211 versus $263 million as on April 30, 2016. Additionally, the company reported long-term debt of $1.92 billion in its books of accounts as on October 31, 2016, compared to $1.23 billion as on April 30, 2016.
Dividend and Share Repurchases
In a separate press release on November 17, 2016, Brown-Forman's Board of Directors raised the regular quarterly cash dividend by 7.4% to $0.1825 per share on the Class A and Class B common stock. The dividend is payable on January 03, 2017 to stockholders of record on December 02, 2016. Furthermore, the company had made dividend payment in 71 consecutive years and has increased the dividend for 33 consecutive years.
During the first six months of FY17, Brown-Forman repurchased 9.3 million Class A and Class B shares for $442 million, at an average price of $48 per share. As on October 31, 2016, the company had a balance of $448 million under its share repurchase authorization.
Earnings Outlook
Brown-Forman's management reiterated its outlook for full year FY17 and anticipates underlying net sales growth in the range of 4% to 5%. Underlying operating income growth is forecasted to be in the range of 6% to 8%. Furthermore, diluted earnings for FY17 are expected to lie between $1.71 per share and $1.81 per share, which includes foreign exchange headwinds of approximately $0.05 at current spot rates.
Stock Performance
Brown-Forman's class A's share price finished yesterday's trading session at $47.61, slightly sliding 0.19%. A total volume of 33.30 thousand shares exchanged hands, which was higher than the 3 months average volume of 20.41 thousand shares. The stock is trading at a PE ratio of 18.21. The stock currently has a market cap of $6.72 billion.
At the close of trading session on December 13, 2016, Brown-Forman's class B stock price rose slightly by 0.33% to end the day at $45.56. A total volume of 884.16 thousand shares were exchanged during the session. The company's share price has gained 0.88% in the past month. The stock currently has a market cap of $18.23 billion. The company's shares are trading at a PE ratio of 17.27 and have a dividend yield of 1.60%.
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