Brown-Forman, the Louisville-based maker of Jack Daniel's Tennessee Whiskey and Woodford Reserve bourbon, reported strong fourth-quarter and yearly sales and earnings Wednesday.
Donald Berg, Brown-Forman chief financial officer and executive vice president, told Wall Street analysts in a conference call, "2013 was a stellar year at Brown-Forman, with record sales, gross profit and operating income. ... All in all, another great year of what we believe to be top-tier growth."
For the quarter ending April 30, net sales were up 8 percent over the previous year, to $866 million.
Diluted earnings per share for the quarter rose 8 percent, to 52 cents, compared to 49 cents in the fourth quarter the previous year, including about 7 cents of benefits because of the timing of shipments and discrete tax items, the company reported in a news release before the market opened.
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For the year, reported net sales were up 5 percent to more than $3.78 billion, with reported operating income up 14 percent to $898 million.
Diluted earnings per share were up 16 percent to $2.75, compared to $2.37 in the prior year. Earnings were negatively affected by the absence of the Hopland-based wines (the company sold its Hopland, Calif., wine division, including Fetzer, in April 2011) and adverse foreign exchange rates.
"We are pleased to have delivered another year of top-tier industry results," Brown-Forman CEO Paul Varga said. "The company achieved solid price increases, which helped drive margin expansion. Due to continued global interest in North American whiskey and favorable trends in premiumization, we remain cautiously optimistic that Brown-Forman's strong and balanced organic growth will continue in fiscal 2014."
Highlights for the fiscal year 2013 included:
■ Jack Daniel's family of brands increased net sales 11 percent.
■ Super- and ultra-premium whiskey brands increased net sales 19 percent.
■ Underlying operating income increased 13 percent, driven by top-line growth, gross margin expansion and operating expense leverage;
■ Brown-Forman generated an industry-leading return on investment capital of 22 percent.
Fueling the growth: strength of the North American whiskey category, continued growth of Jack Daniel's Tennessee Honey, and growth from premium (higher-priced) brands.
For 2014, Brown-Forman predicted continued growth for the Jack Daniel's family and for its super-premium brands, including Woodford Reserve, Herradura tequila, Gentleman Jack and Jack Daniel's Single Barrel.
That should result in operating income growth of 9 to 11 percent, with earnings estimated to be $2.80 to $3 per share for the year.
The executives said Brown-Forman plans further single-digit price increases this year, building on 2013's price increases, which helped fuel the bottom-line growth.
Sales of Woodford Reserve, the company's premium bourbon brand, grew 28 percent globally last year, and the first television ad campaign is coming soon to help capitalize on the opportunities presented by bourbon, given the brand's limited sales outside the United States so far.
"Strong consumer interest in bourbon both in U.S. and outside will continue," with potential to build on the interest in both flavored whiskey and premiums, Berg said.
Brown-Forman spent $100 million in 2013 to expand its Lynchburg, Tenn., plant and establish a new cooperage in Alabama. The company anticipates spending $130 million to $150 million in 2014 and 2015 on continued expansions.
Included in the capital expenditures will be construction of new bourbon rickhouses in Woodford County. On June 1, Brown-Forman closed on the $1.1 million purchase of 48 acres next to its current Woodford Reserve distillery and filed a conditional use permit request for plans to build as many as five maturation warehouses over the next few years.