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- **Emerging Market Growth**: 12% organic growth in Mexico, Brazil, and Travel Retail offset developed market declines.
- **Blackberry Success**: Jack Daniel's Tennessee Blackberry exceeded expectations, driving 18% RTD growth in Mexico and strong international launches.
- **Headwinds**: 61% used barrel sales decline and 60% Canada sales drop constrain top line.
- **Gross Margin Expansion**: 30bps expansion from A&D benefits, despite cost/mix headwinds.
- **Strategic Initiatives**: Distributor transitions, workforce restructuring, and innovation (Blackberry) positioning for long-term growth.

**【CEO Summary Section】**
- **Global Performance**: Organic net sales were flat in the first half, driven by 12% growth in emerging markets (Mexico, Brazil) and 6% growth in Travel Retail, offsetting a 6% decline in developed international markets and flat U.S. performance.
- **Strategic Innovations**: Jack Daniel's Tennessee Blackberry exceeded expectations, with shipments exceeding depletions and strong international launches in the U.K., Germany, and France. New Mix (tequila-based RTD) contributed 18% organic growth in Mexico.
- **Headwinds**: Used barrel sales declined 61%, and Canada's organic sales dropped 60% due to U.S. spirits being off-shelf in most provinces.
- **U.S. Distributor Changes**: Transition to new distributors in 13 markets (effective August 1) is complete, with improved focus and investment from partners. Organic net sales closed the gap to total distilled spirits (TDS) in the U.S., with depletion-based results +3% vs. TDS takeaway -3%.

**【CFO Financial Commentary】**
- **Gross Margin**: Reported gross margin expanded 30bps to 59.5%, driven by $190m A&D benefit (Korbel divestiture, Sonoma-Cutrer TSA end) offsetting $160m headwinds from lower production, inflation, and RTD mix.
- **Operating Expenses**: Organic A&P down 1% (aligned with depletion-based sales), organic SG&A down 4% due to workforce restructuring. Full-year outlook for organic operating income: low single-digit decline.
- **Cash Flow**: Free cash flow +179% to $236m, driven by lower CapEx ($110-120m vs. prior $125-135m) and working capital management. Dividend increased 2%, with $99m share buybacks under $400m authorization.
- **Full Year Guidance**: Reaffirmed low single-digit organic decline, with gross margin expansion from A&D benefits offsetting cost/mix headwinds.

**【Q&A Highlights】**
- **Holiday Season**: Distributors are focused on Jack Daniel's Blackberry and Tennessee Honey/Fire/Applie, with cautious consumer behavior in U.S. and Europe. Teams are prepared for seasonality post-transition.
- **Consumer Trends**: U.S. TDS takeaway down low single-digit, with trade-down to $10-30 price points. Global Travel Retail passenger traffic exceeds pre-pandemic levels.
- **Pricing Strategy**: U.S. pricing down 0.3%, with rational industry behavior. Focus on protecting margins while supporting innovation.
- **Blackberry Launch**: International launches in 8 markets (U.K., Germany, France, GTR) show strong trade/consumer feedback. U.S. shipments/depletions gap narrowing as launch matures.
- **Cost Savings**: SG&A savings moderating as 2025 workforce restructuring benefits lap. Continued focus on controlling controllable expenses.


Brown-Forman Corporation (BF.B) Q2 2026 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

BF.A

BF.A fundamentals

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