Brown-Forman Corp. (BF.A), one of the leading producers and distributors of premium alcoholic beverages in the world, posted fiscal 2010 third-quarter earnings of $107.9 million or $0.73 per share, compared to $123.4 million or $0.81 in the year-ago quarter. The quarterly earnings surpassed the Zacks Consensus Estimate by two cents.
During the quarter, net sales increased 10% to $861.7 million compared to $784.1 million in the year-ago period. The increase was primarily due to strong sales of ready-to-drink brands. For the first nine months of fiscal 2010, the company also reported healthy sales of its ready-to-drink brands, along with strong sales of brands such as Gentleman Jack, Jack Daniel’s, and el Jimador.
Brown-Forman’s gross profit increased 11% during the quarter to $410.9 million, while gross margin increased slightly to 47.7%. Advertising expenses increased 6% to $92.0 million due to a shift in spending towards the latter half of the fiscal year.
Selling, general and administrative expenses also increased 16% to $131.5 million due to packaging enhancements, a rise in promotional activity, and ready-to-drink product expansion. Consequently, Brown-Forman recorded a 2% dip in operating income during the quarter to $173.9 million from $177.2 million in the year-ago period.
Brown-Forman ended the quarter with cash and equivalents of $241.7 million and long-term debt of $508.3 million. At quarter end, Brown-Forman’s net debt was $525 million, down nearly $200 million from a year ago. The company improved its total debt to total capital ratio to 29% during the quarter from 37% in the year-earlier period.
Management approved a regular quarterly dividend of $0.30 per share. The company has paid regular quarterly cash dividends consecutively for the past 64 years and has increased the same for the last 26 years. Brown-Forman has narrowed its earnings guidance for fiscal 2010 in the range of $2.98 to $3.08 per share from its earlier guidance of $2.95 to $3.15.
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