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Beam Reports First Quarter Results

Stocks in this article: BEAM

Beam Inc. (NYSE: BEAM), a leading global premium spirits company, today reported strong results for the first quarter of 2012. Reported net sales increased 2%, reflecting the adverse impact on comparisons of the initial sale of inventory in the year-ago period for the start-up of the company’s enhanced Australia distribution agreement. On a comparable basis, net sales were up 13%, reflecting strong growth for the company’s bourbon brands and shipments of newly introduced products.

Operating income grew faster than sales, benefiting from higher volumes, product mix and foreign exchange. Diluted earnings per share from continuing operations were $0.49, up 26%, on a reported basis. Diluted EPS before charges/gains was $0.53, up 29%, reflecting strong operating performance and the benefit of lower interest expense.

Continued Market Outperformance

“We indicated we expected a strong start to 2012, and the first quarter was a little better than we anticipated as we benefited from strong demand and excellent initial sell-in for new product launches that are front-loaded in 2012,” said Matt Shattock, president and chief executive officer of Beam.

“Consistent with our long-term goals, we once again outperformed our global market on sustained momentum for our Power Brands, led by continued gains for Jim Beam and Maker’s Mark in the fast-growing bourbon category,” Shattock continued. “Our organic growth strategy is proving highly effective. Our innovation pipeline delivered several exciting new products across categories that helped boost our sales in our seasonally smallest quarter. Once again, our comparable net sales growth was broad-based across our three regions, and emerging markets delivered strong double-digit gains. We expanded margins and delivered double-digit growth in operating income and earnings per share.”

For the first quarter of 2012:

  • Income from continuing operations was $78.4 million, or $0.49 per diluted share, compared to $61.7 million, or $0.39 per share, for the first quarter of 2011.
  • Excluding charges and gains, diluted EPS from continuing operations was $0.53, up 29% from $0.41 in the year-ago quarter.
  • Net sales were $533.8 million (excluding excise taxes), up 2%.
  • Net sales were up 13% on a comparable basis, which adjusts for foreign exchange, acquisitions/divestitures, and the impact of the Australia spirits distribution agreement announced in the first quarter of 2011.
    • Comparable net sales were up 12% in North America, up 12% in Europe/Middle East/Africa (EMEA), and up 16% in Asia Pacific/South America (APSA).
  • Operating income was $131.1 million, up 17%.
    • Operating income before charges/gains was $138.0 million, also up 17%.
  • Adjusted return on invested capital (rolling 12 months) was 7% and was 23% excluding intangibles.

Enhanced Confidence in 2012 Earnings Target

“We’re encouraged by the strength of our first quarter results and our continued outperformance against our market. Our momentum is carrying into the second quarter, which is already off to a strong start. As a reminder, second quarter results will cycle against our 2011 innovations that launched principally in Q2 last year,” Shattock said.

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