Beam Inc. reports Q1 results
Beam Inc., Deerfield, Ill., reported a net sales increase by 8 percent to $577.7 million, excluding excise taxes, in the first quarter of 2013, benefiting from strong commercial performance and the acquisition of Pinnacle Vodka. On a comparable basis, net sales increased 3 percent, reflecting the comparison to the quarter from the previous year when new product introductions and route-to-market transitions helped comparable net sales increase 13 percent, the company reports.
Operating income increased 37 percent in the quarter, benefiting from factors including favorable product mix and the timing of expenses, the company says. Diluted earnings per share (EPS) from continuing operations were $0.72, up 47 percent, while diluted EPS before charges/gains increased 21 percent to $0.64, it says.
“We’re pleased with Beam’s strong start to 2013,” said Matt Shattock, president and chief executive officer of Beam, in a statement. “Even as we lapped our most challenging quarterly sales growth comparison of the year, our brands sustained their momentum in the marketplace and continued to outperform. We delivered above-market growth in North America, led by our heartland United States market, and we also continued to benefit from our sustained strength in bourbon and successful innovations across our portfolio in key markets around the world.
“While sales were in line with our expectations, we delivered better-than-expected leverage at the bottom line, which we anticipate will reverse in the next couple of quarters,” he continued. “Margins benefited from factors we called out last quarter: the timing of raw materials-related costs, favorable product mix, and the carryover benefit of previously implemented price increases. Mix was better than expected due to strong demand for our premium innovations and our high-end whiskies, led by Maker’s Mark. The bottom line further benefited from an advertising shift to the second and third quarters.”
In North America, the strong comparable sales growth reflected favorable mix, carryover pricing and the accelerated timing of innovations, which combined to overcome a challenging comparison to 12 percent growth a year ago, the company says.
Results for Power Brands, including Jim Beam, Maker’s Mark, Sauza, Pinnacle, Courvoisier, Canadian Club and Teacher’s, in the company’s seasonally smallest sales quarter were in line with expectations and reflected exceptional 19 percent net sales growth for these brands compared with the quarter from the previous year, the company says. Notably, Maker’s Mark sales increased 44 percent, and Pinnacle and Canadian Club each increased 8 percent.
In addition, as a category, Beam’s Rising Stars brands, including Laphroaig, Knob Creek, Basil Hayden’s, Kilbeggan, Cruzan, Hornitos, Skinnygirl and Sourz, increased by 20 percent, it reports.
“Our first quarter results combined with our inherent strengths reinforce our confidence in our outlook for the full year, and we’re reaffirming our target to deliver high-single-digit growth in diluted EPS before charges/gains for 2013,” Shattock said in a statement.
The company continues to expect that brand investment will rise at a rate in line with sales growth for the full year, it says.
The company also reaffirmed its target to generate free cash flow for 2013 in the range of $300 million to $350 million, which incorporates continued investment to increase distillation capacity and produce more aged spirits to support long-term growth.