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Beam Reports Second Quarter Results

Stocks in this article: BEAM

“In addition, consistent with our focus on high-return organic growth opportunities, we intend to make stepped up investments in two key areas to fuel our momentum and further enhance our prospects for long-term profitable growth: First, we will upweight marketing investment in the second half behind our most exciting brands and innovations; And second, we are accelerating investment to lay down more aged spirits to support future worldwide demand for our Bourbon, Scotch and Cognac brands. These investments, which include expanding our distillation and warehouse capacity, come on top of our sustained investment in new-product innovation, including our new Global Innovation Center in Kentucky which we’ll open in the fourth quarter.

“Our confidence in boosting our level of investment is reinforced by the effectiveness of our growth strategy and the resilience of our global spirits market. Given the strength we’ve seen in the first half, we now expect our market will grow value in 2012 slightly above our previous estimate of 3%. Our expectation reflects uncertainty in international economies that is being offset by strength in our heartland U.S. spirits market.

“Looking to the balance of the year, we expect that EPS growth will moderate in the second half versus the first half reflecting our accelerated investments, and as we’ve previously indicated, third-quarter EPS growth will also be tempered by an unfavorable comparison due to replenishment of customer inventories for Skinnygirl in the prior-year quarter. At the same time, we now expect our 2012 acquisitions to be a few cents accretive to this year’s earnings per share, rather than neutral,” Shattock said.

The company also noted that it expects the deployment of free cash to barrel more aged spirits will result in an earnings-to-free-cash-conversion rate for 2012 of approximately 80% versus its long-term target in the 90% range.

Key Brand Performance

Comparable net sales growth, year-to-date 2012 (January – June):

            Net Sales Growth (1)
Power Brands           +12%
Jim Beam           +11%
Maker’s Mark          


Sauza           +6%
Pinnacle           newly acquired
Courvoisier           +21%
Canadian Club           -2%
Teacher’s           +3%
Rising Stars           +19%
Laphroaig           +3%
Knob Creek           +9%
Basil Hayden           +33%
Kilbeggan           +71%
Cruzan           +7%
Hornitos           -7%
EFFEN           -14%
Pucker Vodka           +17%
Skinnygirl           +81%
Sourz           +15%
Local Jewels           -2%
Value Creators           +2%
Total (2)           +8%

Results include ready-to-drink products



Comparable net sales growth rate represents the percentage increase or decrease in reported net sales in accordance with U.S. GAAP, adjusted for certain items. A reconciliation from reported to comparable net sales growth rates, a non-GAAP measure, and the reasons why management believes these adjustments are useful are included in the attached financial tables.


Total represents consolidated Beam comparable net sales (excluding excise taxes), including non-branded sales.


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