Brown Forman Inc

Good day and thank you for standing by. Welcome to the Brown Foreman Corporation fourth quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Sue Peram, Director, Investor Relations. Please go ahead.

Thank you, and good morning, everyone. I would like to thank each of you for joining us today for Brown Foreman's fourth quarter and fiscal 2021 earnings call. Joining me today are Lawson Whiting, President and Chief Executive Officer, Jane Moreau, Executive Vice President and Chief Financial Officer, and Leanne Cunningham, Senior Vice President, Shareholder Relations Officer, Commercial Finance, and Financial Planning and Analysis. This morning's conference call contains forward-looking statements based on our current expectations. Numerous risks and uncertainties may cause actual results to differ materially from those anticipated or projected in these statements. Many of the factors that will determine future results are beyond the company's ability to control or predict. You should not place undue reliance on any forward-looking statements, and the company undertakes no obligation to update any of these statements, whether due to new information, future events, or otherwise. This morning, we issued a press release containing our results for the fourth quarter and fiscal year 2021 results. in addition to posting presentation materials that Lawson and Jane will walk through momentarily. Both the release and the presentation can be found on our website under the section titled Investors, Events and Presentations. In the press release, we have listed a number of the risk factors you should consider in conjunction with our forward-looking statements. Other significant risk factors are described in our Form 10-K and Form 10-Q reports, filed with the Securities and Exchange Commission. During this call, we will be discussing certain non-GAAP financial measures. These measures are reconciliation to the most directly comparable GAAP financial measures and the reasons management believes they provide useful information to investors regarding the company's financial conditions and results of operations are contained in the press release and investor presentation. With that, I would like to turn the call over to Lawson.

Thank you, Sue, and good morning, everyone. I'm pleased to be here today to share a few remarks regarding our results this year. It's a bit hard to believe, but given that our fiscal year end is April 30, we're at the stage in our COVID-19 journey where our results include a full year of living and working and building brands amid a global pandemic. This year showed us that we have an agile organization, a resilient business, and a caring team that is emerging stronger and better from challenging times. Our long-term values, our strategic priorities, and our core purpose of enriching life have been our guide, and they have served us well. I'm proud of how our team responded in this environment to deliver the level of results that we're able to share with you today. In fact, if you were to look solely at the financial reports we released today, you may or may not fully appreciate the magnitude of what we accomplished. In a year unlike any other, we delivered top line growth of plus 6%, which is consistent with our long-term performance. Yet this year was anything but consistent and conditions were anything but normal. The pandemic created unprecedented market conditions and perhaps surprisingly, in many of our largest markets, really strong performance. At the same time, these results would not have been possible without the resilience, creativity, agility, and determination of our employees around the world. So before moving on, I do want to thank each and every one of our employees for their continued focus over these past 12 months and for all they have done and continue to do to rise to the challenge, reimagine the future, take care of each other, and move the business forward. I'm immensely proud of what we were able to accomplish, and I hope you are too. So in fiscal 21, we focused on the core elements of our strategy to deliver results. We were strengthened by the quality of our brand portfolio, our geographic diversification, and the strength of our balance sheet. I'll share a few examples. First, we continued our ongoing efforts to reshape our portfolio by focusing on premium products and driving innovation in key categories, such as American whiskey, tequilas, and RTDs. Last fiscal, this included the sale of Canadian Mist early times in Collingwood. It also included the acquisition of Part-Time Rangers, a regional RTD brand in New Zealand and Australia. We also placed strong focus on our existing RTD brands, including Jack Daniel's RTDs and Numix. Together, they surpassed 20 million cases. And we continue to place energy and emphasis on our Jack Daniel's flavors, which has resulted in really strong growth. with Jack Daniel's Apple alone surpassing 500,000 cases in just its second year, and Jack Daniel's Tennessee Honey eclipsed the 2 million case mark and really has become a solid growth driver for the company. Geographically, we established our own distribution organizations in the UK and Thailand, allowing us increased control over our brand building efforts in these markets, and we've also initiated plans to create own distribution organizations in Russia, Belgium, and Taiwan. From an organizational and people perspective, at the beginning of the year, we really redeployed portions of our workforce in response to the shifts in our business due to the pandemic. We're investing in teams in Europe that are going to focus on emerging brands. This is really an effort to accelerate our growth rate in brands such as Gentleman Jack, Woodford Reserve, our single malt scotches, and Saline Irish Whiskey. And recently, we announced the launch of our integrated marketing communications organization, or something we call IMC. And by investing in IMC, we believe we can improve how we connect with consumers, grow our e-commerce capabilities, fully optimize our brand assets, and leverage our data more effectively. We're confident IMC will be a growth driver for our organization in the years to come as the physical and digital worlds continue to merge. Finally, we continue to invest behind our business in both capital and brand expense to continue growing our leading brands for the long term. Integrated within our strategic priorities are our environmental, social, and governance, or ESG, commitments, including our focus on responsible consumption and marketing, diversity and inclusion, the communities in which our employees live and work, and environmental sustainability. We believe our long-term success is tied intrinsically with our ability to lead in each of these areas. So as such, over the past year, we made considerable progress against all aspects of ESG. From an environmental standpoint, we established ambitious new sustainability commitments with a focus on climate action, water stewardship, the circular economy, and our supply chain. Given the important role business has to play and the importance of these issues to our business, we had to draw a line in the sand. So we now have compelling, meaningful, quantitative goals, and we will hold ourselves accountable. And very importantly, from a social perspective, we committed to be better and do better by building a more diverse, inclusive, and equitable company and community. Internally, this includes 10 new actions from the executive leadership team to drive increased accountability and improve representation and development of people of color. For the first time ever, we tied 10% of the executive leadership team's fiscal 21 short-term cash incentive compensation to our D&I goals. And we continue to make progress against the initiatives set forth in our 10-year D&I strategy, Many Spirits, One Brown Foreman. Our 10 employee resource groups and their many leaders, members, and allies are critical to our work. I'm reminded of this once again as we are in the midst of Pride Month here, embracing LGBTQ plus diversity and raising our own awareness around equality and allyship. Finally, from a governance perspective, I recognize that we're a bit unique given that we are family controlled. However, we believe strongly that our governance system gives us a distinct competitive advantage by allowing us to consider longer-term time horizons and make decisions that will benefit our brands, our shareholders, and our organization for generations to come. As you know, in January, we announced that our board chair, George Garvin Brown IV, will retire in July and hand over leadership of our board of directors to Campbell Brown, the 10th Brown family member and second fifth-generation family member to serve in this role. I want to take this opportunity to once again thank Garvin, whose leadership has been steadfast, not only during the last year, but through his 14 years as board chair. It's been a pleasure working alongside you. And as I begin to wrap up, I would be remiss if I didn't address tariffs, which continue to have a huge impact on our performance this past year, and in fact, our last three years. As you know, the U.S. and EU announced an agreement in mid-May to suspend the planned doubling of tariffs, to 50% on American whiskey on June 1st. We, of course, were pleased with that development and continue to be encouraged about the possibility of the full removal of tariffs on American whiskey. But in the meantime, American whiskey still faces an unlevel playing field and remains subject to 25% retaliatory tariffs. We hope that the U.S., the U.K., and the EU governments can work quickly to address the trade issues affecting American whiskey and and potentially threatening other spirits categories too. And please remove all spirits tariffs before the EU tariff escalation pause expires at the end of November. Our organization has adjusted to an evolving world. We understand how to manage change and volatility and thrive. Today's results are evidence of our collective and continued success and our ability to care for each other, our communities, our environment, and our business. Finally, before I turn things over to Jane, I wanted to take this opportunity to recognize her and her 30-year career at Brown Foreman. Jane has been a valued partner of mine since we first had cubicles near each other back in 1997. In fact, we've worked together throughout most of our time at Brown Foreman as we each steadily progressed into new and expanded roles. I don't think it's an exaggeration to say that Jane has had one of the most successful careers of any executive at Brown Foreman. Most recently, she's spearheaded innovative capital investment strategies, resource allocation models, and business transformation efforts that have been instrumental to achieving our ambitions. She's also been instrumental in advancing our D&I initiatives and conversations, particularly over the last year. She is a true ally. I appreciate the impact she's had not only on the business results and our culture, but on the many people at Brown Forman that she has mentored and developed over the years. Jane, on behalf of our entire organization, I want to simply say thank you. With that, I'll turn the call over, and Jane will walk us through our fourth quarter and fiscal year 2021 results.