Q1 2026 Brown Forman Corp Earnings Call

Can only mode.

After the Speakers' presentation there'll be a question and answer session to ask a question. During this session you will need to press star one on our telephone you will then hear Ottoman message about being a hand as race to withdraw your question. Please press star one again previously advised that today's conference is being recorded.

I hand, the conference over to your first speaker today through Param, Vice President Director of Investor Relations. Please go ahead.

Operator: Good day, and thank you for standing by. Welcome to the Brown-Forman Corporation first quarter fiscal year 2026 earnings call. At this time, all participants are in 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 one-one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one-one again. Please be advised that today's conference is being recorded. I'll now hand the conference over to our first speaker today, Susanne Perram, Vice President of Investor Relations. Please go ahead.

Speaker #2: Good day, and thank you for standing by. Welcome to the Brown-Forman Corp first quarter fiscal year 2026 earnings call. At this time, all participants are in listen-only mode.

Thank you and good morning, everyone I would like to thank each of you for joining us today for Brown Forman first quarter fiscal year 2026 earnings call. Joining me today are Lawson Whiting, President and Chief Executive Officer, and Leann Cunningham Executive Vice President and Chief Financial Officer.

Speaker #2: 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 11 on your telephone.

Speaker #2: You will then hear automated messages vibrating your hand is raised. To withdraw your question, please press star one-one again. Please be advised that today's conference is being recorded.

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.

Speaker #2: I would like to hand the conference over to your first speaker today, Susanne Perram, Vice President, Director of Rest and Relations. Please go ahead.

Susanne Perram: Thank you, and good morning, everyone. I would like to thank each of you for joining us today for Brown-Forman Corporation's first quarter fiscal year 2026 earnings call. Joining me today are Lawson Whiting, President and Chief Executive Officer, and Leanne Cunningham, Executive Vice President and Chief Financial Officer. 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 except as required by law, the company undertakes no obligation to update any of these statements, whether due to new information, future events, or otherwise.

Speaker #3: Thank you, and good morning, everyone. I would like to thank each of you for joining us today for Brown-Forman's first quarter fiscal year 2026 earnings call.

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 except as required by law. The company undertakes no obligation to update any of these statements whether due to new information future events or otherwise.

Speaker #3: Joining me today are Lawson Whiting, President and Chief Executive Officer, and Leanne Cunningham, Executive Vice President and Chief Financial Officer. This morning's conference call contains forward-looking statements based on our current expectations.

This morning, we issued a press release containing our results for the first quarter fiscal year 2026. In addition to posting presentation materials that Lawson and Leann will walk through momentarily.

Speaker #3: 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.

Both the release and the presentation can be found on our website under the section titled investors events and presentations.

Speaker #3: You should not place undue reliance on any forward-looking statements and accept as required by law the company undertakes no obligation to update any of these statements, whether due to new information, future events, or otherwise.

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 2025 Form 10-K and from time to time in our Form 10-Q report filed with the Securities and Exchange Commission.

Susanne Perram: This morning, we issued a press release containing our results for the first quarter fiscal year 2026, in addition to posting presentation materials that Lawson and Leanne 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 2025 Form 10-K and, from time to time, in our Form 10-Q report filed with the Securities and Exchange Commission. During this call, we will be discussing certain non-GAAP financial measures.

Speaker #3: This morning, we issued a press release containing our results for the first quarter fiscal year 2026 in addition to posting presentation materials that Lawson and Leanne will walk through momentarily.

During this call we will be discussing certain non-GAAP financial measures. These measures a 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.

Speaker #3: 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.

And results of operations are contained in the press release and Investor presentation.

Speaker #3: Other significant risk factors are described in our 2025 Form 10-K and from time to time in our Form 10-Q reports filed with the Securities and Exchange Commission.

With that I would like to turn the call over to Lawson.

Thank you Sue and good morning, everyone I'm glad to be with you to share the highlights and drivers of our first quarter fiscal 2026 top line performance with a focus on our geographic performance a few unique headwinds to our business and strategic innovation, then I'll turn it over to Leann, who will share additional insights on other financial highlights including <unk>.

Speaker #3: 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.

Susanne Perram: These measures are reconciled to the most directly comparable GAAP financial measures, and the reasons management believes they provide useful information to investors regarding the company's financial condition 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.

Margin and operating expenses before she wraps up with comments on our full year fiscal 2026 outlook, which we are reaffirming but before I begin I wanted to take this opportunity to recognize and her 30 year career at Brown Forman as you likely read in our news release earlier. This week Leann has made the decision to retire on May one.

Speaker #3: With that, I would like to turn the call over to Lawson.

Lawson Whiting: Thank you, Sue, and good morning, everyone. I'm glad to be with you to share the highlights and drivers of our first quarter fiscal 2026 top-line performance, with a focus on our geographic performance, a few unique headwinds to our business, and strategic innovation. I'll turn it over to Leanne, who will share additional insights on other financial highlights, including gross margin and operating expenses, before she wraps up with comments on our full year fiscal 2026 outlook, which we are reaffirming. Before I begin, I wanted to take this opportunity to recognize Leanne and her 30-year career at Brown-Forman. As you likely read in our news release earlier this week, Leanne has made the decision to retire on May 1, 2026. She's been a respected colleague for the past three decades and a valued partner of mine since she joined the executive leadership team four years ago.

Speaker #4: Thank you, Sue, and good morning, everyone. I'm glad to be with you to share the highlights and drivers of our first quarter fiscal 2026 top-line performance with a focus on our geographic performance, a few unique headwinds to our business, and strategic innovation.

2026, she has been a respected colleague for the past three decades and a valued partner of mine. Since you joined the executive leadership team for years ago I've seen the impact. He has made not only on our business results and culture, but on the many people at Brown Forman that she has mentored and developed over the years Liam on behalf.

Speaker #4: Then I'll turn it over to Leanne, who will share additional insights on other financial highlights, including gross margin and operating expenses, before she wraps up with comments on our full year fiscal 2026 outlook, which we are reaffirming.

Speaker #4: But before I begin, I wanted to take this opportunity to recognize Leanne Cunningham and her 30-year career at Brown-Forman. As you likely read in our news release earlier this week, Leanne has made the decision to retire on May 1, 2026.

For the entire organization. Thank you for everything you've done for Brown Forman.

You'll be missed.

So now onto our results overall I'm pleased with the start to our year, our first quarter of fiscal 2026 reported net sales declined 3%, but organic net sales increased 1% after adjusting for the A&D impact related to Sonoma Cutrer Finlandia in core bell as well as the negative effect of foreign exchange.

Speaker #4: She's been a respected colleague for the past three decades and a valued partner of mine since she joined the executive leadership team four years ago.

Lawson Whiting: I've seen the impact she's made not only on our business results and culture, but on the many people at Brown-Forman that she has mentored and developed over the years. Leanne, on behalf of the entire organization, thank you for everything you've done for Brown-Forman. You will be missed. Now on to our results. Overall, I'm pleased with the start to our year. Our first quarter of fiscal 2026 reported net sales declined 3%, but organic net sales increased 1% after adjusting for the A&D impact related to Sonoma-Cutrer, Finlandia, and Korbel, as well as the negative effect of FX. From a geographic perspective, our organic net sales growth was led by the emerging international markets, which grew 25%, and the travel retail channel, which increased 7%. This growth was partially offset by a 9% decline in the developed international markets collectively and a 2% decline in the U.S.

Speaker #4: I've seen the impact she has made not only on our business results and culture, but on the many people at Brown-Forman that she has mentored and developed over the years.

On a geographic perspective, our organic net sales growth was led by the emerging international markets, which grew 25% in the travel retail channel, which increased 7%. This growth was partially offset by a 9% decline in the developed international markets collectively and a 2% decline in the United States. While there are a number of markets influence.

Speaker #4: Leanne, on behalf of the entire organization, thank you for everything you've done for BROWN FORMAN. You will be missed. So now, onto our results.

Speaker #4: Overall, I'm pleased with the start to our year. Our first quarter fiscal 2026 reported net sales declined 3%, but organic net sales increased 1% after adjusting for the A and D impact-related tsunami trailer, Finlandia and Corbell, as well as the negative effect of foreign exchange.

These results I'm going to focus on a few emerging and developed markets as well as the United States, which highlights some key successes challenges and transformations that we're driving across the business I'll start with key emerging international markets, where we have positioned ourselves for strong growth the economic environment in Mexico remains challenging with consumers.

Speaker #4: From a geographic perspective, our organic net sales growth was led by the emerging international markets, which grew 25% in the travel retail channel, which increased 7%.

Speaker #4: This growth was partially offset by a 9% decline in the developed international markets collectively and a 2% decline in the United States. While there are a number of markets influencing these results, I'm going to focus on a few emerging and developed markets, as well as the United States, which highlight some key successes, challenges, and transformations that we're driving across the business.

<unk> down, but despite this our organic net sales increased 22%. In addition, we gained market share and in the RTD and whiskey categories and continue to outperform in the takeaway results within Rtd's. We've continued to lead the category in Mexico with the world's first akela based RTD new mix in an environment where.

Lawson Whiting: While there are a number of markets influencing these results, I'm going to focus on a few emerging and developed markets, as well as the U.S., which highlight some key successes, challenges, and transformations that we're driving across the business. I'll start with key emerging international markets where we have positioned ourselves for strong growth. The economic environment in Mexico remains challenging, with consumers trading down, but despite this, our organic net sales increased 22%. In addition, we gained market share in the RTD and whiskey categories and continue to outperform in the takeaway results. Within RTDs, we've continued to lead the category in Mexico with the world's first tequila-based RTD, New Mix. In an environment where consumers are seeking value, convenience, and flavor, we're well positioned, having leveraged innovation to fuel our growth and attract new consumers while continuing to engage our current consumers.

Tumors are seeking value convenience and flavor, we're well positioned having leveraged innovation to fuel our growth and attract new consumers, while continuing to engage our current consumers Brazil's another key growth driver of our emerging markets, where organic net sales grew 30%. This is a result of many years of strategic focus on.

Speaker #4: I'll start with key emerging international markets where we have positioned ourselves for strong growth. The economic environment in Mexico remains challenging, with consumers trading down. Despite this, our organic net sales increased 22%.

Speaker #4: In addition, we gained market share in the RTD and whiskey categories and continue to outperform in the takeaway results. Within RTDs, we've continued to lead the category in Mexico with the world's first tequila-based RTD, New Mix.

Building, the Jack Daniel's family of brands in the city of Sao Paulo with this strong foundation in place we've been expanding our geographic reach increasing distribution for Jack Daniel's, Tennessee Whiskey, along with Jack Daniel's, Tennessee, Apple Honey and fire. In addition, we believe premium amortization as an opportunity in the market through additional focus on our Super <unk>.

Speaker #4: In an environment where consumers are seeking value, convenience, and flavor, we're well-positioned, having leveraged innovation to fuel our growth and attract new consumers while continuing to engage our current consumers.

<unk> whisky portfolio, we've driven increased distribution for brands, such as Woodford Reserve, Jack Daniel's single barrel and gentleman, Jack while off a small base. These brands are growing at a very strong double digit rate turning to our developed markets I want to focus on Europe, where consumer sentiment and confidence remained pressured in most European economies. Despite.

Lawson Whiting: Brazil is another key growth driver of our emerging markets, where organic net sales grew 30%. This is a result of many years of strategic focus on building the Jack Daniel's family of brands in the city of São Paulo. With this strong foundation in place, we've been expanding our geographic reach, increasing distribution for Jack Daniel's Tennessee Whiskey, along with Jack Daniel's Tennessee Apple, Honey, and Fire. In addition, we believe premiumization is an opportunity in the market. Through additional focus on our super premium whiskey portfolio, we've driven increased distribution for brands such as Woodford Reserve, Jack Daniel's Single Barrel, and Gentleman Jack. While off a small base, these brands are growing at a very strong double-digit rate. Turning to our developed markets, I want to focus on Europe, where consumer sentiment and confidence remain pressured in most European economies.

Speaker #4: Brazil is another key growth driver of our emerging markets, where organic net sales grew 30%. This is a result of many years of strategic focus on building the Jack Daniels family of brands in the city of São Paulo.

Speaker #4: With this strong foundation in place, we've been expanding our geographic reach, increasing distribution for Jack Daniel's Tennessee Whiskey, along with Jack Daniel's Tennessee Apple, Honey, and Fire.

This premium amortization is still evident in some countries and we're gaining share of the whiskey category and seven of the top European markets organic net sales in Germany declined 13% as economic conditions remain challenging for consumers and tariff uncertainty caused disruptions in ordering patterns from retailers, which negatively impacted the <unk>.

Speaker #4: In addition, we believe premiumization is an opportunity in the market. Through additional focus on our super premium whiskey portfolio, we've driven increased distribution for brands such as Woodford Reserve, Jack Daniel's Single Barrel, and Gentleman Jack. While off a small base, these brands are growing at a very strong double-digit rate.

Year over year trends, while total distilled spirits trends are in the mid single digit decline in the competitive environment is intensifying Jack Daniel's, Tennessee Whiskey grew value share in the market. We also saw double digit growth for Super premium brands, such as gentleman, Jack and diplomatic overwhelm similar to Germany economic conditions in the UK are negatively impacting.

Speaker #4: Turning to our developed markets, I want to focus on Europe, where consumer sentiment and confidence remain pressured in most European economies. Despite this, premiumization is still evident in some countries, and we're gaining share of the whiskey category in seven of the eight top European markets.

Lawson Whiting: Despite this, premiumization is still evident in some countries, and we're gaining share of the whiskey category in seven of the eight top European markets. Organic net sales in Germany declined 13% as economic conditions remain challenging for consumers, and tariff uncertainty caused disruptions in ordering patterns from retailers, which negatively impacted the year-over-year trends. While total distilled spirits trends are in the mid-single-digit decline and the competitive environment is intensifying, Jack Daniel's Tennessee Whiskey grew value share in the market. We also saw double-digit growth for super premium brands such as Gentleman Jack and Diplomático Rum. Similar to Germany, economic conditions in the UK are negatively impacting consumer spending, contributing to an organic net sales decrease of 16%. While total distilled spirits trends, including the whiskey category, are in mid-single-digit decline, Jack Daniel's Tennessee Whiskey again gained market share.

Speaker #4: Organic net sales in Germany declined 13%, as economic conditions remain challenging for consumers, and tariff uncertainty caused disruptions in ordering patterns for retailers, which negatively impacted the year-over-year trends.

<unk> spending contributing to in our organic net sales decrease of 16%, while total distilled spirits trends, including the whiskey category are in mid single digit decline Jack Daniel's, Tennessee Whiskey again gained market share. The tequila category remains a bright spot growing double digits without human or gaining share El <unk> remains the <unk>.

Speaker #4: While total distilled spirits trends are in the mid-single-digit decline, and the competitive environment is intensifying, Jack Daniel's Tennessee whiskey grew value share in the market.

<unk> premium, 100% agave tequila in the United Kingdom, we continue to see <unk> as a key introduction to consumers globally on how miscible and great tasting, 100% agave tequila can be I'll wrap up my market comments with the United States, where the decline in total distilled spirits trends remain in the low single digit range while.

Speaker #4: We also saw a double-digit growth for super premium brands such as Gentleman Jack and Diplomatico Rum. Similar to Germany, economic conditions in the UK are negatively impacting consumer spending, contributing to an organic net sales decrease of 16%.

Speaker #4: While total distilled spirits trends, including the whiskey category, are in mid-single-digit decline, Jack Daniel's Tennessee whiskey again gained market share. The tequila category remains a bright spot, growing double digits without Humidor gaining share.

<unk> net sales declined 2%. The results were ahead of our depletion based results and takeaway trends. This was largely influenced by the launch of Jack Daniel's, Tennessee, Blackberry and the U S distributor transitions, which were effective on August one I will talk more about Jack Daniel's, Tennessee, Blackberry in a few moments, but before I do that I'd like to share a few thoughts on the distributor.

Lawson Whiting: The tequila category remains a bright spot, growing double digits, with el Jimador gaining share. El Jimador remains the number one premium 100% agave tequila in the United Kingdom. We continue to see el Jimador as a key introduction to consumers globally on how mixable and great tasting 100% agave tequila can be. I'll wrap up my market comments with the United States, where the decline in total distilled spirits trends remain in the low single-digit range. While organic net sales declined 2%, the results were ahead of our depletion-based results and takeaway trends. This was largely influenced by the launch of Jack Daniel's Tennessee Blackberry and the U.S. distributor transitions, which were effective on August 1. I'll talk more about Jack Daniel's Tennessee Blackberry in a few moments, but before I do that, I'd like to share a few thoughts on the distributor transitions.

Speaker #4: Alhumidor remains the number one premium, 100% agave tequila in the United Kingdom. We continue to see Alhumidor as a key introduction to consumers globally on how mixable and great-tasting 100% agave tequila can be.

Transitions as you May recall. This was the first time in 60 years, we have made a significant change to our distributor partners in the U S. We began our work on the RFP process over a year ago with the goal of driving improved performance and a material impact to our business in the U S and while we are very much in the initial stage of the transition.

Speaker #4: I'll wrap up my market comments with the United States, where the decline in total distilled spirits trends remains in the low single-digit range. While organic net sales declined 2%, the results were ahead of our depletion-based results in takeaway trends.

Speaker #4: This was largely influenced by the launch of Jack Daniel's Tennessee Blackberry and the U.S. distributor transitions, which were effective on August 1st. I'll talk more about Jack Daniel's Tennessee Blackberry in a few moments, but before I do that, I'd like to share a few thoughts on the distributor transitions.

We're pleased with the early signs from our distributors and believe these changes will unlock growth strengthen our distributor partnerships and position us to compete effectively in the evolving U S beverage alcohol industry key outcomes of the RFP process with our relationship with the distributor as new or existing include increased dedication updated.

Lawson Whiting: As you may recall, this was the first time in 60 years we had made a significant change to our distributor partners in the U.S. We began our work on the RFP process over a year ago with the goal of driving improved performance and a material impact to our business in the U.S. While we're very much in the initial stage of the transition, we're pleased with the early signs from our distributors and believe these changes will unlock growth, strengthen our distributor partnerships, and position us to compete effectively in the evolving U.S. beverage alcohol industry. Key outcomes of the RFP process, whether our relationship with a distributor is new or existing, include increased dedication, updated business relationship terms, and expanded relationships and diversification.

Speaker #4: As you may recall, this was the first time in 60 years we had made a significant change to our distributor partners in the U.S.

Speaker #4: We began our work on the RFP process over a year ago with the goal of driving improved performance and a material impact to our business in the U.S.

Business relationship terms and expanded relationships and diversification. The increased dedication comes from an almost three times increase in head count dedicated to the Brown Forman portfolio dedicated selling divisions and dedicated roles in those divisions, which will bring greater focus and coverage to our brands. We've also updated our ways of working and.

Speaker #4: And while we're very much in the initial stage of the transition, we're pleased with the early signs from our distributors and believe these changes will unlock growth, strengthen our distributor partnerships, and position us to compete effectively in the evolving U.S. beverage alcohol industry.

Investment in margin expectations with an increase in distributor investment and improved margin structure.

Speaker #4: Key outcomes of the RFP process, whether our relationship with the distributor is new or existing, include increased dedication, updated business relationship terms, and expanded relationships and diversification.

Turn now to a couple of items that are somewhat unique to brown forman used barrel sales and the trade dispute between the U S and Canada, which created significant headwinds to our first quarter organic net sales results organic net sales for used barrels decreased over 40% with demand and pricing reflective of the current industry operating environment.

Lawson Whiting: The increased dedication comes from an almost three times increase in headcount dedicated to the Brown-Forman portfolio, dedicated selling divisions, and dedicated roles in those divisions, which will bring greater focus and coverage to our brands. We've also updated our ways of working, investment, and margin expectations with an increase in distributor investment and improved margin structure. I'll turn now to a couple of items that are somewhat unique to Brown-Forman: used barrel sales and the trade dispute between the U.S. and Canada, which created significant headwinds to our first quarter organic net sales results. Organic net sales for used barrels decreased over 40%, with demand and pricing reflective of the current industry operating environment, particularly the Scotch and Irish whiskey suppliers. Canada's organic net sales declined nearly 60% as beverage alcohol products produced in the United States remained off the shelves in the majority of the Canadian provinces.

Speaker #4: The increased dedication comes from an almost three-times increase in headcount dedicated to the Brown-Forman portfolio, dedicated selling divisions, and dedicated roles in those divisions, which will bring greater focus and coverage to our brands.

Clearly, the Scotch and Irish whiskeys with buyers Canada's organic net sales declined nearly 60% is beverage alcohol products produced in the United States remained off the shelves and the majority of the Canadian provinces, while our non U S brands such as diplomatic <unk> continued to deliver growth they were not able to offset the decline of our brands that are.

Speaker #4: We have also updated our ways of working and investment in margin expectations, with an increase in distributor investment and an improved margin structure. I'll turn now to a couple of items that are somewhat unique to Brown-Forman.

Speaker #4: Barrel sales and the trade dispute between the U.S. and Canada created significant headwinds to our first quarter organic net sales results. Organic net sales for used barrels decreased over 40%, with demand and pricing reflective of the current industry operating environment, particularly among Scotch and Irish whiskey suppliers.

Produced in the U S that said.

Said, we remain optimistic based on our recent developments related to tariffs under the U S. MCA.

Finally, let me provide a few thoughts on strategic innovation, particularly for the Jack Daniel's family of brands, which saw the launch of Jack Daniel's, Tennessee, Blackberry in the U S. A few weeks ago. When it comes to innovation. Our goal is to extend the brand's appeal to new consumers and capitalize on new occasions, while strengthening the parent brand the launch of Blackberry.

Speaker #4: Canada's organic net sales declined nearly 60% as beverage alcohol products produced in the United States remained off the shelves in the majority of the Canadian provinces.

Lawson Whiting: While our non-U.S. brands, such as Diplomático Rum and el Jimador, continued to deliver growth, they were not able to offset the decline of our brands that are produced in the U.S. That said, we remain optimistic based on our recent developments related to tariffs under the USMCA. Finally, let me provide a few thoughts on strategic innovation, particularly for the Jack Daniel's family of brands, which saw the launch of Jack Daniel's Tennessee Blackberry in the U.S. a few weeks ago. When it comes to innovation, our goal is to extend the brand's appeal to new consumers and capitalize on new occasions while strengthening the parent brand. The launch of Blackberry has been incredibly promising and was based on insights such as innovation, particularly from flavored whiskey and U.S. whiskey, being the largest growth contributor to total distilled spirits.

Speaker #4: While our non-U.S. brands, such as Diplomatico and Alhumidor, continued to deliver growth, they were not able to offset the decline of our brands that are produced in the U.S.

Been incredibly promising and was based on insights such as innovation, particularly from flavored whiskey in U S whiskey being the largest growth contributor to total distilled spirits. Jack Daniel's has a proven track record of leveraging our global footprint and capabilities to extend the impact of new flavor launches Blackberry as a globally relevant.

Speaker #4: That said, we remain optimistic based on our recent developments related to tariffs under the USMCA. Finally, let me provide a few thoughts on strategic innovation, particularly for the Jack Daniel's family of brands, which saw the launch of Jack Daniel's Tennessee Blackberry in the U.S. a few weeks ago.

Speaker #4: When it comes to innovation, our goal is to extend the brand's appeal to new consumers and capitalize on new occasions while strengthening the parent brand.

Flavor trend across food and beverage categories, and consumer testing, Jack Daniel's, Tennessee, Blackberry had high consumer appeal resonating with a very broad audience distributors are excited with shipments already exceeding our expectations and we're getting wonderful feedback and buzz on the new product from existing fans, new consumers customers and the.

Speaker #4: The launch of Blackberry has been incredibly promising and was based on insights such as innovation, particularly from flavored whiskey, with U.S. whiskey being the largest growth contributor to total distilled spirits.

Lawson Whiting: Jack Daniel's has a proven track record of leveraging our global footprint and capabilities to extend the impact of new flavor launches. Blackberry is a globally relevant flavor trend across food and beverage categories. In consumer testing, Jack Daniel's Tennessee Blackberry had high consumer appeal, resonating with a very broad audience. Distributors are excited, with shipments already exceeding our expectations, and we're getting wonderful feedback and buzz on the new product from existing fans, new consumers, customers, and the media. While we're excited about the start, we remain cautiously optimistic. Our work isn't done yet, and we need to fuel this excitement to drive continued momentum and strong consumer takeaway. While we're certainly proud of our strong track record of innovation, the long-term growth and resilience of the Jack Daniel's family of brands is also fueled by strategic relationships such as our McLaren Formula One and music sponsorships.

Media, while we're excited about the start we remain cautiously optimistic our work is not done yet and we need to fuel. This excitement to drive continued momentum and strong consumer takeaway, while we're certainly proud of our strong track record of innovation, the long term growth and resilience of the Jack Daniel's family of brands is also fueled by strategic.

Speaker #4: Jack Daniel's has a proven track record of leveraging our global footprint and capabilities to extend the impact of new flavor launches. Blackberry is a globally relevant flavor trend across food and beverage categories, and consumer testing for Jack Daniel's Tennessee Blackberry had high consumer appeal, resonating with a very broad audience.

Speaker #4: Distributors are excited, with shipments already exceeding our expectations, and we're getting wonderful feedback and buzz on the new product from existing fans, new consumers, customers, and the media.

Relationships, such as our Mclaren Formula one and music sponsorships. We're also leveraging an evolved on premise strategy and our new media campaign to engage a new generation of legal drinking age consumers, while remaining intently focused on retaining our core consumers as a result compared to a year ago, we're seeing improvements in brand health drew.

Speaker #4: While we're excited about the start, we remain cautiously optimistic. Our work isn't done yet, and we need to fuel this excitement to drive continued momentum and strong consumer takeaway.

Even by young adult spirits drinkers across key measures of penetration affinity and uniqueness, we see significant positive shifts in brand performance over the last year in particular, among legal drinking age to age 30 for consumers, but also among consumers aged 35 and above.

Speaker #4: While we're certainly proud of our strong track record of innovation, the long-term growth and resilience of the Jack Daniel's family of brands is also fueled by strategic relationships such as our McLaren Formula One and music sponsorships.

Lawson Whiting: We're also leveraging an evolved on-premise strategy and our new media campaign to engage a new generation of legal drinking age consumers while remaining intently focused on retaining our core consumers. As a result, compared to a year ago, we're seeing improvements in brand health driven by young adult spirits drinkers. Across key measures of penetration, affinity, and uniqueness, we see significant positive shifts in brand performance over the last year, in particular among legal drinking age to age 34 consumers, but also among consumers age 35 and above. These positive shifts across both age categories affirm that our strategic actions are reaching new consumers while not alienating those who have been friends of Jack for years, and we will continue to take bold actions to further enhance the health and growth of Jack Daniel's.

Speaker #4: We're also leveraging an evolved on-premise strategy and our new media campaign to engage a new generation of legal drinking age consumers while remaining intently focused on retaining our core consumers.

These positive shifts across both age categories, a firm that our strategic actions are reaching new consumers, while not alienating those who have been friends of Jack for years, and we will continue to take bold actions to further enhance the health and growth of Jack Daniel's we look forward to sharing more on this during our upcoming Investor day on October 15th where our focus will be into.

Speaker #4: As a result, compared to a year ago, we're seeing improvements in brand health driven by young adult spirits drinkers. Across key measures of penetration, affinity, and uniqueness, we see significant positive shifts in brand performance over the last year, in particular among legal drinking age to age 34 consumers, but also among consumers aged 35 and above.

Finally on Jack will in person attendance has limited the presentations will be webcast details regarding the live webcast of the presentations along with the Q&A session will be shared in the next few weeks overall I'm pleased with the start to our fiscal 2026 and believe we are still positioned to achieve our full year guidance during the first quarter.

Speaker #4: These positive shifts across both age categories affirm that our strategic actions are reaching new consumers while not alienating those who have been friends of Jack for years, and we will continue to take bold actions to further enhance the health and growth of Jack Daniels.

Are we focused on strategically growing our portfolio of brands globally through our strengthened route to consumer and thoughtful innovation to help navigate the difficult short term conditions, we're benefiting from our streamlined and simplified workforce structure, which will increase our agility in responding to this dynamic operating environment and I'd like to thank our brown forman employees for their effort.

Lawson Whiting: We look forward to sharing more on this during our upcoming Investor Day on October 15, where our focus will be entirely on Jack. While in-person attendance is limited, the presentations will be webcast. Details regarding the live webcast of the presentations, along with the Q&A session, will be shared in the next few weeks. Overall, I'm pleased with the start to our fiscal 2026 and believe we are still positioned to achieve our full-year guidance. During the first quarter, we focused on strategically growing our portfolio of brands globally through a strengthened route to consumer and thoughtful innovation to help navigate the difficult short-term conditions. We're benefiting from our streamlined and simplified workforce structure, which will increase our agility in responding to this dynamic operating environment, and I'd like to thank our Brown-Forman employees for their efforts and dedication.

Speaker #4: We look forward to sharing more on this during our upcoming Investor Day on October 15th, where our focus will be entirely on Jack. While in-person attendance is limited, the presentations will be webcast.

Speaker #4: Details regarding the live webcast of the presentations, along with the Q&A session, will be shared in the next few weeks. Overall, I'm pleased with the start to our fiscal 2026 and believe we are still positioned to achieve our full-year guidance.

And dedication with that I will turn the call over to Leann, who will provide more details on our first quarter 2026 results.

Thank you Allison and good morning, everyone. As Wilson mentioned I will provide additional insights on other financial highlights, including gross margin and operating expenses, although conclude our prepared remarks with comments on our full year fiscal 2026 outlook.

Speaker #4: During the first quarter, we focused on strategically growing our portfolio of brands globally through a strengthened route to consumer and thoughtful innovation to help navigate the difficult short-term conditions.

Speaker #4: For benefiting from our streamlined and simplified workforce structure, which will increase our agility in responding to this dynamic operating environment, and I'd like to thank our BROWN FORMAN employees for their efforts and dedication.

First to our gross margin in the first quarter of fiscal 2026.

Gross profit decreased 2%, resulting in a reported gross margin of 59, 8%.

Lawson Whiting: With that, I'll turn the call over to Leanne, who will provide more details on our first quarter 2026 results.

Speaker #4: With that, I'll turn the call over to Leanne, who will provide more details on our first quarter 2026 results.

Our gross profit margin expanded 40 basis points due to a 240 basis points A&D benefit largely related to the absence of the prior year transition services agreement portion now marketshare and Finlandia.

Susanne Perram: Thank you, Lawson, and good morning, everyone. As Lawson mentioned, I will provide additional insights on other financial highlights, including gross margin and operating expenses. I will then conclude our prepared remarks with comments on our full-year fiscal 2026 outlook. First, to our gross margin. In the first quarter of fiscal 2026, our reported gross profit decreased 2%, resulting in a reported gross margin of 59.8%. Our gross profit margin expanded 40 basis points due to a 240 basis points A&D benefit largely related to the absence of the prior year transition service agreement for Sonoma-Cutrer and Finlandia.

Speaker #3: Thank you, Lawson, and good morning, everyone. As Lawson mentioned, I will provide additional insights on other financial highlights, including gross margin and operating expenses.

Speaker #3: I will then conclude our prepared remarks with comments on our full-year fiscal 2026 outlook. First, to our gross margin. In the first quarter of fiscal 2026, our reported gross profit decreased 2%, resulting in a reported gross margin of 59.8%.

That was partially offset by 90 basis points of higher costs, largely due to the impact of inflation on our input cost and lower production levels 50 basis points of unfavorable price mix due to the strong growth as a new mix and lower used barrel sales and the 50 basis points of negative effect of foreign exchange.

Speaker #3: Our gross profit margin expanded by 40 basis points, due to a 240 basis points A&D benefit largely related to the absence of the prior year transition services agreement for the tsunami trailer in Finlandia.

It's driven primarily by the strengthening of the Mexican peso.

Continuing with our other financial highlights I'll turn to our operating expenses in the first quarter organic advertising expense decreased 3% as our long term philosophy is to align A&P spend with our depletion based topline trend and we are thoughtfully managing controllable expenses in this dynamic environment.

Susanne Perram: This benefit was partially offset by 90 basis points of higher cost, largely due to the impact of inflation on our input cost and lower production levels, 50 basis points of unfavorable price mix due to the strong growth of New Mix and lower used barrel sales, and the 50 basis points of negative effect of FX driven primarily by the strengthening of the Mexican peso. Continuing with our other financial highlights, I'll turn to our operating expenses. In the first quarter, organic advertising expense decreased 3% as our long-term philosophy is to align A&P spend with our depletion-based top-line trends, and we are thoughtfully managing controllable expenses in this dynamic environment.

Speaker #3: This benefit was partially offset by 90 basis points of higher costs, largely due to the impact of inflation on our input costs and lower production levels.

Speaker #3: Fifty basis points of unfavorable price mix due to the strong growth of New Mix and lower used barrel sales, and the fifty basis points of negative effect of foreign exchange, driven primarily by the strengthening of the Mexican peso.

We continue to believe our level of brand investment is healthy which is evidenced by how we have increased our brand investment at a 4% CAGR over the last five years and that the strength of our brands enabled us to remain competitive in the current environment.

Speaker #3: Continuing with our other financial highlights, I'll turn to our operating expenses. In the first quarter, organic advertising expense decreased 3%, as our long-term philosophy is to align A&P spend with our depletion-based top-line trends. We are thoughtfully managing controllable expenses in this dynamic environment.

Our organic SG&A investment decreased 7%, which reflected lower compensation related expenses related to our workforce restructuring initiative, we announced in January.

Our new structure creates a more streamlined organization, leveraging greater synergies and enhanced ways of working which we believe will enable us to fuel the growth of our brands our business and our people at a more rapid pace.

Susanne Perram: We continue to believe our level of brand investment is healthy, which is evidenced by how we have increased our brand investment at a 4% CAGR over the last five years, and that the strength of our brands enables us to remain competitive in the current environment. Our organic SG&A investment decreased 7%, which reflected lower compensation-related expenses related to our workforce restructuring initiative we announced in January. Our new structure creates a more streamlined organization, leveraging greater synergies and enhanced ways of working, which we believe will enable us to fuel the growth of our brands, our business, and our people at a more rapid pace. In total, reported operating income decreased 7% and organic operating income increased 2% in the first quarter of fiscal 2026. In addition to the $19 million non-operating post-retirement expense, these results led to a 13% diluted EPS decrease to $0.36 per share.

Speaker #3: We continue to believe our level of brand investment is healthy, which is evidenced by how we have increased our brand investment at a 4% CAGR over the last five years. The strength of our brands enables us to remain competitive in the current environment.

Total reported operating income decreased 7% and organic operating income increased 2% in the first quarter of fiscal 2020.

Speaker #3: Our organic SG&A investment decreased 7%, which reflected lower compensation-related expenses associated with our workforce restructuring initiative announced in January. Our new structure creates a more streamlined organization, leveraging greater synergies and enhanced ways of working. We believe this will enable us to fuel the growth of our brands, our business, and our people at a more rapid pace.

It doesn't take a $19 million non operating post retirement expense. These results led to a 13% diluted earnings per share decreased to 36 cents per share.

Now that we have been through our financial highlights for the first quarter of fiscal 2026, I'd like to turn the attention to our full year fiscal 2026 outlet, which is loss and shared we are reaffirming the operating environment remains volatile as the geopolitical and global macroeconomic conditions have cream.

Speaker #3: In total, reported operating income decreased 7%, and organic operating income increased 2% in the first quarter of fiscal 2026. In addition to the $19 million non-operating post-retirement expense, these results led to a 13% diluted earnings-per-share decrease to $0.36 per share.

<unk> sustained levels of consumer uncertainty.

We continue to expect that the behavior of the consumer and the level of trade inventories will not change meaningfully during the fiscal 2020 next year.

Susanne Perram: Now that we have been through our financial highlights for the first quarter of fiscal 2026, I'd like to turn attention to our full-year fiscal 2026 outlook, which, as Lawson shared, we are reaffirming. The operating environment remains volatile as the geopolitical and global macroeconomic conditions have created sustained levels of consumer uncertainty. We continue to expect that the behavior of the consumer and the level of trade inventories will not change meaningfully during the fiscal 2026 year. While the global trade environment remains dynamic and fluid, our guidance assumes the current tariff impact on our products will remain unchanged. We strongly believe that the strength of our portfolio, the benefits of our route to consumer transitions, and our evolved workforce structure, as well as strategic innovation, will help us in navigating these short-term cyclical disruptions.

Speaker #3: Now that we have been through our financial highlights for the first quarter of fiscal 2026, I'd like to turn the attention to our full year fiscal 2026 outlook, which, as Lawson shared, we are reaffirming.

While the global trade environment remains dynamic and fluid our guidance assumes the current tariff impact on our products will remain unchanged. We strongly believe that the strength of our portfolio the benefits of our route to consumer transitions and our evolved work force structure as well as strategic innovation.

Speaker #3: The operating environment remains volatile, as the geopolitical and global macroeconomic conditions have created sustained levels of consumer uncertainty. We continue to expect that the behavior of the consumer and the level of trade inventories will not change meaningfully during the fiscal year 2026.

Will help us in navigating these short term cyclical or disruptions.

From a geographic perspective, we expect continued growth in our emerging markets and the depletion base trends in the U S and developed international markets to remain similar to fiscal 2025 with the exception of Canada. While we are encouraged by recent discussions American Spanish products had been off the shelf <unk>.

Speaker #3: While the global trade environment remains dynamic and fluid, our guidance assumes the current tariff impact on our products will remain unchanged. We strongly believe that the strength of our portfolio, the benefits of our route-to-consumer transitions, and our evolved workforce structure, as well as strategic innovation, will help us navigate these short-term cyclical disruptions.

Canada for months that had a significant impact on our first quarter of fiscal 2026, which will impact our full fiscal year results and has been included in our full year guidance.

Susanne Perram: From a geographic perspective, we expect continued growth in our emerging markets and the depletion-based trends in the U.S. and developed international markets to remain similar to fiscal 2025, with the exception of Canada. While we were encouraged by recent discussions, American spirits products have been off the shelf in Canada for months. This had a significant impact on our first quarter of fiscal 2026, which will impact our full fiscal year results and has been included in our full-year guidance. In addition to Canada, the other cyclical driver is the year-over-year change in our used barrel sales. Our used barrel sales are returning to levels that are more typical in challenging and uncertain operating environments for our industry. We still expect used barrel sales to be lower by more than half of fiscal 2025 level, which is a significant year-over-year headwind.

Speaker #3: From a geographic perspective, we expect continued growth in our emerging markets, and the depletion-based trends in the U.S. and developed international markets to remain similar to fiscal 2025, with the exception of Canada.

In addition to Canada. The other cyclical driver is the year over year change in our used barrel sales.

Our used barrel sales are returning to levels that are more typical in challenging and uncertain operating environment for our industry.

Speaker #3: While we are encouraged by recent discussions, American spirits products have been off the shelf in Canada for months. This has had a significant impact on our first quarter of fiscal 2026, which will impact our full fiscal year results, and has been included in our full year guidance.

We still expect used barrel sales to be lower by more than half of fiscal 2025 level, which is a significant year over year headwind.

We continue to execute our long term pricing strategy and expect to benefit from our revenue growth management activities and strategic innovation, particularly Jack Daniel's, Tennessee Blackberry.

Speaker #3: In addition to Canada, the other cyclical driver is the year-over-year change in our used barrel sales. Our used barrel sales are returning to levels that are more typical in challenging and uncertain operating environments for our industry.

While anticipating product mix headwinds due to the faster growth of our RTD portfolio and agency brands as we ramp up these businesses in Japan and Mexico.

Speaker #3: We still expect used barrel sales to be lower by more than half of fiscal 2025 levels, which is a significant year-over-year headwind. We continue to execute our long-term pricing strategy and expect to benefit from our revenue growth management activities and strategic innovation, particularly Jack Daniel's Tennessee Blackberry.

As we prepared for the launch of Jack Daniel's, Tennessee, Blackberry and the transition to our new distributors in the U S. We experienced unusual phasing in the first quarter of fiscal 2026, leading to higher shipments compared to the year ago period.

Susanne Perram: We continue to execute our long-term pricing strategy and expect to benefit from our revenue growth management activities and strategic innovation, particularly Jack Daniel's Tennessee Blackberry, while anticipating product mix headwinds due to the faster growth of our RTD portfolio and agency brands as we ramp up these businesses in Japan and Mexico. As we prepared for the launch of Jack Daniel's Tennessee Blackberry and the transition to our new distributors in the U.S., we experienced unusual phasing in the first quarter of fiscal 2026, leading to higher shipments compared to the year-ago period. We continue to anticipate that shipments will roughly equal depletions in fiscal 2026, which will result in higher depletions and lower shipments as we progress through the remainder of the first half of our fiscal year.

We continue to anticipate that shipments will roughly equal depletions in fiscal 2026, which will result in higher deflation and lower shipments as we progress through the remainder of the first half of our fiscal year.

Speaker #3: While anticipating product mix headwinds due to the faster growth of our RTD portfolio and agency brands as we ramp up these businesses in Japan and Mexico.

Speaker #3: As we prepared for the launch of Jack Daniel's Tennessee Blackberry and the transition to our new distributors in the U.S., we experienced unusual phasing in the first quarter of fiscal 2026, leading to higher shipments compared to the year-ago period.

As our new distributors become fully integrated and the initial launch of Jack Daniel's, Tennessee, Blackberry concludes we anticipate that ordering patterns in the second half of the year will normalize to reflect more typical seasonality.

For fiscal 2026 based on the currently known factors, we expect a low single digit decline in organic net sales and reported gross margin expansion as we believe price mix will largely offset cost and that we will benefit from A&D.

Speaker #3: We continue to anticipate that shipments will roughly equal depletions in fiscal 2026, which will result in higher depletions and lower shipments as we progress through the remainder of the first half of our fiscal year.

Susanne Perram: As our new distributors become fully integrated and the initial launch of Jack Daniel's Tennessee Blackberry concludes, we anticipate that ordering patterns in the second half of the year will normalize to reflect more typical seasonality. For fiscal 2026, based on the currently known factors, we expect a low single-digit decline in organic net sales and reported gross margin expansion, as we believe price mix will largely offset cost and that we will benefit from A&D. While input costs will continue to benefit from lower agave costs, we project higher costs compared to the prior year period, largely driven by the impact of inflation and lower production volumes. In addition, as we shared previously, following the divestiture of Finlandia and Sonoma-Cutrer brands, we entered into transition service agreements, which had a negative impact on our overall reported gross margin.

Speaker #3: As our new distributors become fully integrated and the initial launch of Jack Daniel's Tennessee Blackberry concludes, we anticipate that ordering patterns in the second half of the year will normalize to reflect more typical seasonality.

While input costs will continue to benefit from lower agave costs, we project higher cost compared to the prior year period, largely driven by the impact of inflation and lower production volumes.

In addition, as we shared previously following the divestiture of Atlanta, and Sonoma Cutrer brand, we entered into transition services agreements, which had a negative impact on our overall reported gross margin. The TSA has had ended resulting in a positive impact on a year over year basis also.

Speaker #3: For fiscal 2026, based on the currently known factors, we expect a low single-digit decline in organic net sales and reported gross margin expansion, as we believe price mix will largely offset cost, and that we will benefit from A and D.

Speaker #3: While input costs will continue to benefit from lower agave costs, we project higher costs compared to the prior-year period, largely driven by the impact of inflation and lower production volumes.

The absence of Corbell is expected to benefit reported gross margin.

Our outlook for organic operating expenses in this challenging environment continues to reflect the investment behind our brands utilizing our long term brand expense philosophy to align A&P spend with our depletion based topline growth.

Speaker #3: In addition, as we shared previously, following the divestiture of Finlandia and Tsunami trailer brands, we entered into transition services agreements, which had a negative impact on our overall reported gross margin.

We also continue to expect a reduction in SG&A related to our strategic workforce restructuring initiative.

Susanne Perram: The TSAs had ended, resulting in a positive impact on a year-over-year basis. Also, the absence of Korbel is expected to benefit reported gross margin. Our outlook for organic operating expenses in this challenging environment continues to reflect investment behind our brands, utilizing our long-term brand expense philosophy to align A&P spend with our depletion-based top-line growth. We also continue to expect a reduction in SG&A related to our strategic workforce restructuring initiative. Based on the above, we are forecasting organic operating income to decline in the low single-digit range. We also expect our effective tax rate to be in the range of approximately 21% to 23%, and that our estimated capital expenditures will be in the range of $125 to $135 million for the fiscal year.

Speaker #3: The TSAs have ended, resulting in a positive impact on a year-over-year basis. Also, the absence of Corbell is expected to benefit reported gross margin.

On the above we are forecasting organic operating income to decline in the low single digit range.

We also expect our effective tax rate to be in the range of approximately 21% to 23%.

Speaker #3: Our outlook for organic operating expenses in this challenging environment continues to reflect investment behind our brands, utilizing our long-term brand expense philosophy to align A&P spend with our depletion-based top-line growth.

Our estimated capital expenditures will be in the range of $125 million to $135 million for the fiscal year.

Speaker #3: We also continue to expect a reduction in SG&A related to our strategic workforce restructuring initiative. Based on the above, we are forecasting organic operating income to decline in the low single-digit range.

This range is lower than previous years, we have completed a number of projects that expansion and continued to fully invest behind our business.

In addition to lower capital expenditures compared to fiscal 2025. We also continue to focus on reducing our finished goods inventory, which should further reduce our working capital and significantly improved cash generated.

Speaker #3: We also expect our effective tax rate to be in the range of approximately 21% to 23%. Additionally, we estimate that our capital expenditures will be in the range of $125 million to $135 million for the fiscal year.

Our first quarter was a good start to fiscal 2026, while volatility and uncertainty will likely be words, we continue to use throughout this fiscal year, we have taken actions focused on our geographies our portfolio and our people that we believe will enable us to navigate the short term challenges as well as <unk>.

Susanne Perram: While this range is lower than previous years, we have completed a number of projects and expansions and continue to fully invest behind our business. In addition to lower capital expenditures compared to fiscal 2025, we also continue to focus on reducing our finished goods inventory, which should further reduce our working capital and significantly improve cash generated. Our first quarter was a good start to fiscal 2026. While volatility and uncertainty will likely be words we continue to use throughout this fiscal year, we have taken actions focused on our geographies, our portfolio, and our people that we believe will enable us to navigate the short-term challenges as well as position the company to deliver long-term growth. Before opening the call to Q&A, I also wanted to take a moment to say thank you.

Speaker #3: While this range is lower than previous years, we have completed a number of projects and expansions and continue to fully invest behind our business.

Speaker #3: In addition to lower capital expenditures compared to fiscal 2025, we also continue to focus on reducing our finished goods inventory, which should further reduce our working capital and significantly improve cash generated.

Positioning the company to deliver long term growth.

Before opening the call to Q&A I also wanted to take a moment to say thank you.

It's impossible to put into words with the last three decades that Brown Forman has meant to me.

Speaker #3: Our first quarter was a good start to fiscal 2026. While volatility and uncertainty will likely be words we continue to use throughout this fiscal year, we have taken actions focused on our geographies, our portfolio, and our people that we believe will enable us to navigate the short-term challenges as well as position the company to deliver long-term growth.

This journey has allowed me to travel the world.

Some of the most iconic spirits brands and work with the most talented teams in the industry.

<unk> accomplishments are not personal achievements. They are the shared success that come from working with exceptional people, who are passionate about making a difference.

I look forward to working with Lawson and the entire executive leadership team to ensure a thoughtful seamless transition to my eventual successor and remain committed to delivering our fiscal 2026 ambitions. While my career at Brown Forman will conclude next may our forever, where the titles of long term shareholder.

Speaker #3: Before opening the call to Q&A, I also wanted to take a moment to say thank you. It's impossible to put into words what the last three decades at Brown-Forman have meant to me.

Susanne Perram: It's impossible to put into words what the last three decades at Brown-Forman Corporation has meant to me. This journey has allowed me to travel the world, build some of the most iconic spirits brands, and work with the most talented teams in the industry. My greatest accomplishments are not personal achievements, they are the shared success that come from working with exceptional people who are passionate about making a difference. I look forward to working with Lawson and the entire executive leadership team to ensure a thoughtful, seamless transition to my eventual successor and remain committed to delivering our fiscal 2026 ambitions. While my career at Brown-Forman Corporation will conclude next May, I will forever wear the titles of long-term shareholder, brand ambassador, and proud consumer of our highest quality premium plus portfolio. This concludes our prepared remarks. Please open the line for questions.

Speaker #3: This journey has allowed me to travel the world, build some of the most iconic spirits brands, and work with the most talented teams in the industry.

Speaker #3: My greatest accomplishments are not personal achievements, they are the shared success that come from working with exceptional people who are passionate about making a difference.

<unk> and proud consumer of our highest quality premium plus portfolio. This concludes our prepared remarks. Please open the line for questions.

Speaker #3: I look forward to working with Lawson Whiting and the entire executive leadership team to ensure a thoughtful, seamless transition to my eventual successor, and I remain committed to delivering our fiscal 2026 ambitions.

Thank you at this time, we will conduct a question answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please limit yourself to one question. Please standby, while we compile the Q&A roster.

Speaker #3: While my career at Brown-Forman will conclude next May, I will forever wear the titles of long-term shareholder, brand ambassador, and proud consumer of our highest quality premium-plus portfolio.

And our first question comes from the line of Peter Grom of UBS. Your line is now open.

Speaker #3: This concludes our prepared remarks. Please open the line for questions.

Thanks, operator, and good morning, everyone.

Operator: Thank you. At this time, we'll conduct the question and answer session. As a reminder, to ask a question, you will need to press star one-one on your telephone and wait for your name to be announced. To withdraw your question, please press star one-one again. Please limit yourself to one question. Please stand by while we compile the Q&A roster. Our first question comes from the line of Peter Graham of UBS. Your line is now open.

Speaker #2: Thank you. At this time, we'll conduct the question and answer session. As a reminder, to ask a question, you'll need to press *11 on your telephone and wait for your name to be announced.

And congratulations thank you so much for all the help over the years and best of luck moving forward.

I guess I just wanted to follow up quickly just on kind of the distributor inventory impact.

Speaker #2: To withdraw your question, please press star one-one again. Please limit yourself to one question. Please stand by while we compile the Q&A roster. And our first question concerns a line of Peter Graham of UBS.

Clearly a nice tailwind to sales in the first quarter.

But I just wanted to understand and clarify kind of how you see that evolving as we move through the balance of the year. I think you mentioned land that it would be largely complete by the end of the first half. So just wanted to clarify that as we look out to the second quarter would you anticipate a 400 basis points headwind to organic sales or did I mishear that.

Speaker #2: Your line is now open.

Peter Graham: Thanks, operator, and good morning, everyone. Leanne, congratulations. Thank you so much for all the help over the years, and best of luck moving forward. I just wanted to follow up quickly on the distributor inventory impact. Clearly a nice tailwind to sales in the first quarter, but I just want to understand and clarify how you see that evolving as we move through the balance of the year. I think you mentioned, Leanne, that it would be largely complete by the end of the first half. I just want to clarify that as we look out to the second quarter, would you anticipate a 400 basis points headwind to organic sales, or did I mishear that, or am I misunderstanding that?

Speaker #5: Thanks, operator, and good morning, everyone. Leanne, congratulations! Thank you so much for all the help over the years, and best of luck moving forward. I guess I just wanted to follow up quickly on the distributor inventory impact.

Am I misunderstanding that.

Yeah, I think for the entire fiscal year, we're expecting shipments and depletions to be in London, and Thats, including our U S, where we're not expecting any significant changes in the level of our trade inventories now I know we tried in our June call. We said that there would be some shipment disruptions as we've made these transitions in the.

Speaker #5: You know, clearly a nice tailwind to sales in the first quarter. But I just want to understand and clarify how you see that evolving as we move through the balance of the year.

Speaker #5: I think you mentioned, Leanne, that it would be largely complete by the end of the first half. So, I just want to clarify that as we look out to the second quarter, would you anticipate, you know, a 400 basis point headwind to organic sales, or did I mishear that, or am I misunderstanding that?

So it's kind of challenging right now to see some.

Some of these numbers, but in general we believe that our distributors are going to continue to target the low end of their inventories.

Leanne Cunningham: Yeah, I think for the entire fiscal year, we're expecting shipments and depletions to be in line, and that's including, you know, our U.S., where we're not expecting any significant changes in the level of our trade inventories. I know we tried in our June call, we said that there would be some shipment disruptions as we've made these transitions in the U.S., so it's kind of challenging right now to see through to some of these numbers. In general, we believe that our distributors are going to continue to target the low end of their inventories, their low end of the normal range, that retailers kind of have what they need. You can see for the first quarter in Schedule B that our shipments are ahead of depletions.

Speaker #6: Yeah, I think before the entire fiscal year, we're expecting shipments and depletions to be in line. And that includes, you know, our U.S. operations, where we're not expecting any significant changes in the level of our trade inventories.

Low end of the normal range that retailers can have what they need you can see for the first quarter and schedule will be that our shipments are ahead of depletion that's really related to the launch of Jack Daniel's, Tennessee, Blackberry the launch of the new <unk> package and then the distributor transitions in the U S. So you can see on schedule D that there is a.

Speaker #6: Now, I know we tried in our June call. We said that there would be some shipment disruptions as we've made these transitions in the U.S., so it's kind of challenging right now to see through to some of these numbers.

6% increase in the U S and that change in distributor inventories and then also in our emerging international markets at 10% increase and that is due to just phasing comparisons over the prior year period for the UAE and rebuilding some inventory in Paraguay and earn airway because there was those.

Speaker #6: But in general, we believe that our distributors are going to continue to target the low end of their inventories. Their low end of the normal range, that retailers kind of have what they need, you can see for the first quarter and schedule B that our shipments are ahead of depletions.

Leanne Cunningham: That's really related to the launch of Jack Daniel's Tennessee Blackberry, the launch of the new el Jimador package, and then the distributor transitions in the U.S. You can see on Schedule D that there's a 6% increase in the U.S. in net change of distributor inventories, and also in our emerging international markets, a 10% increase. That is due to just phasing comparisons over the prior year period for the UAE and rebuilding of some inventory in Paraguay and Uruguay because there were those importation disruptions that we had in fiscal 2025. Where we believe we'll be, for a full year, shipments and depletions in line with each other. Importantly, also at the first half, we should see our results be in line with our full year guidance from a top-line perspective.

Speaker #6: That's really related to the launch of Jack Daniels Tennessee Blackberry, the launch of the new Alhumidor package, and then the distributor transitions in the US.

Importation disruptions that we had in fiscal 'twenty five so where.

We believe we will be so for full year shipments and Depletions in line with each other.

Speaker #6: So, you can see on Schedule D that there's a 6% increase in the U.S. and that change in distributor inventories. Additionally, in our emerging international markets, there is a 10% increase.

Importantly, also at the first half we should see our results be in line with our full year guidance from a top line perspective.

Speaker #6: And that is due to just phasing comparisons over the prior-year period for the UAE, and rebuilding some inventory in Paraguay and Uruguay because there were those importation disruptions that we had in fiscal 2025.

Thank you one moment for our next question.

And our next question comes from the line of Dean <unk> of Bernstein. Your line is now open.

Yeah.

Speaker #6: So, we believe that for a full year, shipments and depletions will be in line with each other. Importantly, also in the first half, we should see our results be in line with our full year guidance from a top-line perspective.

Yes, Hello, Watson and Liam I'd like to focus my question on <unk>.

A perfectly appreciate the distributor inventory build and the disruption that causes so I'd like to look through it the underlying growth rate, which was down 8% weaker than what you had in Q4 and Q1 last year. So two questions on that first on the quarter in particular.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Adene Sarwat of Bernstein. Your line is now open.

Speaker #2: Thank you. One moment for our next question. And our next question concerns a line of Nadine Sarwat of Bernstein. Your line is now open.

Existing the quarter was the trend the same weaker stronger ended the distribution.

Nadine Sarwat: Hello, Lawson and Leanne. I'd like to focus my question on the U.S. I perfectly appreciate the distributor inventory build and the disruption that causes. I'd like to look through at the underlying growth rate, which was, you know, down 8%, weaker than what you had in Q4 and Q1 last year. Two questions on that. First, on the quarter in particular, exiting the quarter, was the trend the same, weaker, stronger, and did the distribute? Second question is, given the underlying performance, has your view on whether the weak U.S. alcohol trends, are they driven by structural or cyclical? I appreciate this question feels like we're beating a dead horse every quarter, but I'm sure you can appreciate it is the crucial question. Would love to get any updated thoughts that you have on that. Thank you both.

Speaker #7: Yes. Hello, Lawson and Leanne. I'd like to focus my question on the U.S. I perfectly appreciate the distributor inventory build and the disruption that causes.

Yes.

Second question is given the underlying performance has your view on whether the weak U S. Alcohol trends are they driven by structural or cyclical I. Appreciate this question feels like for beating a dead horse every quarter, but I'm sure. You can appreciate it is the crucial question would love to get any updated thoughts that you have on that.

Speaker #7: So I'd like to look through at the underlying growth rate, which was 8% weaker than what you had in Q4 and Q1 last year.

Speaker #7: So, you know, two questions on that. First, on the quarter in particular, exiting the quarter was the trend the same—weaker or stronger? And did the distributor?

At the beginning of the Yeah do you want to go ahead and start with the second part.

Let me Echo.

Again, beating the dead horse Nadeem.

As a good way of putting it because I don't think our answer is going to be a lot different than what we've said before but.

Speaker #7: Second question is, given the underlying performance, has your view on whether the weak US alcohol trends are driven by structural or cyclical? I appreciate this question feels like we're beating a dead horse every quarter, but I'm sure you can appreciate it is the crucial question.

Let me take some time to go through this obviously, we knew this was coming and there are some sort of new pieces of information, but it was kind of a long answer so.

Sure.

Okay.

Speaker #7: I would love to get any updated thoughts that you have on that. Thank you both.

This conversation around structural and cyclical which is really an onshore about 18 months or so now.

Lawson Whiting: At the beginning of that.

Speaker #8: At the beginning of that?

Leanne Cunningham: Do you want to go ahead and start with the second part on structural and cyclical?

Speaker #6: Yeah, do you want to go ahead and start with the second part? I'm sorry.

On the cyclical side of things I mean, there are certainly headwinds around consumer buying pattern.

Speaker #8: Okay. Yes, beating the dead horse, Nadine, that is a good way of putting it because I don't think our answer is going to be a lot different than what we've said before. But let me take some time to go through this.

Lawson Whiting: Yes, beating the dead horse, Nadine. That is a good way of putting it because I don't think our answer is going to be a lot different than what we said before, but let me take some time to go through this. Obviously, we knew this was coming, and there are some sort of new pieces of information, but it was kind of a long answer, so brace for it. Look, I think this conversation around structural and cyclical, which has really been going on for about 18 months or so now, on the cyclical side of things, there are certainly headwinds around consumer buying power, and we've talked about this in the past, but inflation and higher interest rates are certainly hurting consumers. Uncertainty around tariffs, I think was, that was only in the U.S. That actually was more of a global thing, but certainly that didn't help.

Sure.

And we've talked about this in the past, but inflation and higher interest rates are certainly hurting consumers.

Speaker #8: Obviously, we knew this was coming, and there are some sort of new pieces of information, but it was kind of a long answer. So, praise for it.

Uncertainty around tariffs I think.

But that was only in the U S that actually it was more of a global thing, but certainly that didn't help.

Speaker #8: Look, I think this conversation around structural and cyclical, which has really been going on for about 18 months or so now, on the cyclical side of things, I mean, there are certainly headwinds around consumer buying power.

But I do think and I'll come back to something we've.

<unk> talked about before but if you had to say pick out one thing that we think is the strongest factor that would say this really is a cyclical thing is back to where we were two years ago basically today I mean, it was the Q1 earnings literally from without a in August of 'twenty, three so and I remember that.

Speaker #8: And we've talked about this in the past, but inflation and higher interest rates are certainly hurting consumers. Uncertainty around tariffs, I think, was not only in the U.S.; that was actually more of a global thing, but certainly that didn't help.

Quarter.

Because at that time Tds was still enough plus five or 6% range, which it's hard to believe how much that has changed in a two year window, but I think the timing of it is what is important so.

Lawson Whiting: I do think, and I'll come back to something we've, you know, we have talked about before, but if you had to say or pick out one thing that we think is the strongest factor that would say this really is a cyclical thing, it's back to where we were two years ago, basically today. It was the Q1 earnings literally from, what would have been August of 2023. I remember that quarter, because at that time, TDS was still in that plus 5 or 6% range, which it's hard to believe how much that has changed in a two-year window, but I think the timing of it is what is important. So 5 or 6% up at the end of summer in 2023.

Speaker #8: But I do think, and I'll come back to something we've you know, we have talked about before, but if you had to say our pick out, one thing that we think is is the strongest factor that would say this really is a cyclical thing is back to where we were two years ago basically today.

Five or 6% at the end of summer and 23 My Christmas. It was zero and then we got into calendar 'twenty four and it was essentially negative minus two minus three for much of the year and it's stayed in that range ever since.

Speaker #8: I mean, it was the Q1 earnings literally from August of '23. So, and I remember that quarter because at that time, TDS was still in that plus five or six percent range, which it's hard to believe how much that has changed in a two-year window. But I think the timing of it is what is important.

But I would still argue that nothing.

It was really a global thing wasn't just the U S.

A market from plus six.

My call it minus two or sort of eight points of difference.

In what felt like overnight.

Speaker #8: So, five or six percent up at the end of summer in '23. By Christmas, it was zero, and then we got into calendar '24, and it was essentially negative—minus two, minus three, you know, for much of the year. And it's stayed in that range ever since.

We're taking six or eight months to get there, but I truly do not believe that the structural things that people talk about the most is we're back to the cannabis GOP ones and just a general health and wellness consideration that just does not take a market that quickly.

Lawson Whiting: By Christmas, it was zero, and then we got into calendar 2024, and it was essentially negative minus 2, minus 3, for much of the year, and it's stayed in that range ever since. I would still argue that nothing, this was really a global thing. It wasn't just the U.S. Can take a market from plus 6 to, you know, might call it minus 2 or sort of 8 points of difference in what felt like overnight, or taking six or eight months to get there. I truly do not believe that the structural things that people talk about the most, it's, we're back to the cannabis, GLP-1s, and just a general health and wellness consideration. That just does not tank a market that quickly. I still don't believe that.

Speaker #8: But I would still argue that nothing was really a global thing. It wasn't just the U.S. It can take a market from plus six to, you know, call it minus two or sort of eight points of difference, in what felt like overnight.

Still don't believe that so while there is some continuum between cyclical and structural.

I think we've I think generally all of US would agree it's somewhere in the middle there, but I still feel like the cyclical side is a little bit.

Speaker #8: You know, or taking six or eight months to get there. But I truly do not believe that the structural things that people talk about the most, it's we're back to the cannabis GLP ones and just a general health and wellness, consideration, that just is not tangle market, that quickly.

A bigger piece of it now a couple of things.

Iteration in health and wellness in moderation, which is probably the most often talked about it and it certainly gets into the general meeting.

The.

Seemingly every day.

Speaker #8: I still don't believe that. So while you know there is some continuum between cyclical and structural, I think we generally all of us would agree it's somewhere in the middle there, but I still feel like the cyclical side's a little bit a bigger piece of it.

Lawson Whiting: While there is some continuum between cyclical and structural, I think we, I think generally all of us would agree it's somewhere in the middle there, but I still feel like the cyclical side's a little bit a bigger piece of it. Now, a couple of other things. Moderation and health and wellness and moderation, which is probably the most often talked about, and it certainly gets into the general media, you know, seemingly every day. Certainly, there's some people who are drinking on fewer occasions, and others are just drinking fewer per occasion, and then you've got a few that are drifting towards either lower AB or no, you know, or no alcohol products. The whole concept of drinking less but better has been around for a long time, and we think we play pretty well in that space.

Certainly there is some people are drinking on fewer occasions, and others are just drinking fewer per occasion, and then you've got a few that are drifting towards either lower.

No no.

Alcohol products, but.

The whole concept of drinking less but better.

It's been around for a long time, and we think we played pretty well in that space.

Speaker #8: Now, a couple of other things: moderation and health and wellness, and moderation, which is probably the most often talked about. It certainly gets into the general media seemingly every day.

Shift from beer and wine and spirits continues even over in recent quarters and months.

That's been going on as we all know for a long long time, so what are we doing about it.

Speaker #8: Certainly, there's some people who are drinking on fewer occasions, and others are just drinking fewer per occasion. And then you've got a few that are drifting towards either lower AB or no you know or no alcohol products.

Look we've changed the portfolio I think everyone knows that's a longer term play, but we prioritize premium and super premium products and I do think.

As as time goes on that will play out very very well for us.

Speaker #8: But you know the whole concept of drinking less but better has been around for a long time, and we think we played pretty well in that space.

A lot of folks were referencing the Gallup poll that came out.

Few weeks ago.

Lawson Whiting: The shift from beer and wine to spirits continues even over, you know, in recent quarters and months, and that's been going on, as I think we all know, for a long, long time. What are we doing about it? We've changed the portfolio. I think everyone knows that. That's a longer-term play, but we've prioritized premium and super premium products, and I do think as time goes on, that will play out very, very well for us. A lot of folks were referencing the Gallup poll that came out, what was that, a few weeks ago, to talk about the number of Americans drinking at an all-time low. I don't want to spend a lot of time on that, but we internally at least use IWSR a bit more, and then there's Nielsen retail measurements, there's shopper panels we do, all that kind of stuff.

Speaker #8: The shift from beer and wine to spirits continues, even over, you know, in recent quarters and months. That's been going on, as I think we all know, for a long, long time.

To talk about the number of Americans drinking and at all time low.

It's been a lot of time on that but I do we internally at least use <unk> are a bit more and then theres Nielsen retail measurements. There is sharper panels, we do all of that kind of stuff.

Speaker #8: So, what are we doing about it? Look, we've changed the portfolio. I think everyone knows that. That's a longer-term play, but we've prioritized premium and super premium products, and I do think, as time goes on, that will play out very, very well for us.

The methodology and the debt I should say really the data is pretty mixed in so.

I do.

<unk> done it backs up that there had been a decline in the percentage of Americans drinking.

Speaker #8: A lot of folks were referencing the Gallup poll that came out a few weeks ago that talked about the number of Americans drinking being at an all-time low.

It felt like that pull ahead.

I don't want to exaggerate it it is the right word, but it wasn't quite to the extent that we saw and it's.

Speaker #8: And I don't want to spend a lot of time on that, but we do internally at least use IWSR a bit more. Then there's Nielsen Retail Measurements, and there are Shopper Panels who do all that kind of stuff.

Not that many Americans, we see that are actually.

Exiting the category and not drinking at all it's just they're reducing their consumption at the time so.

Lawson Whiting: The methodology, and I should say really, the data is pretty mixed. While I do think, and I think the data backs up that there had been a decline in the percentage of Americans drinking, it felt like that poll had, I don't know if exaggerated is the right word, but it wasn't quite to the extent that we saw, and it's not that many Americans we see that are actually exiting the category and not drinking at all. It's just they're reducing their consumption at the time. A couple of other points. GLP-1s are often talked about in this whole conversation. The growth in those has moderated quite a bit. I don't want to jump on that too hard, but I don't think it's as big of a headwind maybe as it was a year ago. Cannabis, kind of the same thing.

Speaker #8: And the methodology and the I should say really the data is pretty mixed. And so while I do think, and I think the data backs up that there have been a decline in the percentage of Americans drinking, it felt like that poll had I don't know if it exaggerated it is the right word, but it wasn't quite to the extent that we saw, and it's not that many Americans we see that are actually exiting the category and not drinking at all.

<unk>.

A couple of other points GOP ones are often talked about and this and this whole conversation.

That has the growth in those has moderated quite a bit so.

I'm going to jump on that too hard, but I don't think it's as big of a headwind maybe as it was a year ago.

Canada is kind of the same thing I think that's always been a little bit blown out of proportion as to its immediate.

<unk>.

Alcohol spirits consumption, but there was.

Speaker #8: It's just about reducing their consumption at the time. So, you know a couple of other points: GLP-1s are often talked about in this whole conversation.

The other I don't know.

We've talked much about these hemp based beverages that are out there and they are in these are the ones that are hemp derived in their legal as a result of this loophole from the 2018 farm Bill.

Speaker #8: You know that growth has moderated quite a bit. So, you know, I don't want to jump on that too hard, but I don't think it's as big of a headwind.

So many so really all of the states did not anticipate that potential.

Speaker #8: Maybe as it was a year ago. And cannabis kind of the same thing. I think that's always been a little bit blown out of proportion as to its immediate impact on, or yeah, spirits consumption.

That was going to go that way, we still have some concerns over basically the lack of a regulatory framework from framework.

Lawson Whiting: I think that's always been a little bit blown out of proportion as to its immediate impact on alcohol or, yeah, spirits consumption. There are the other, I don't know, I don't think we've talked much about these hemp-based beverages that are out there, and they're in, these are the ones that are hemp-derived, and they're legal as a result of this loophole from the 2018 Farm Bill. You know, so many, or really all the states did not anticipate that potential, that that was going to go that way. We still have some concerns over basically the lack of a regulatory framework, and the need to ensure consumer safety. Those things, net, net, I don't, I don't think that has a material impact on takeaway, but it's still there.

And the need to ensure consumer safety. So those things they've net net I don't I don't think that has a material impact on takeaway, but it is still there so.

Speaker #8: But there are the other things I don't know. I don't think we've talked much about these hemp-based beverages that are out there, and these are the ones that are hemp-derived, and they're legal as a result of this loophole from the 2018 Farm Bill.

Look they're a tailwind too.

It seems like the conversation has moved away from the tailwind and is focused on the negative.

Speaker #8: You know, so many, or really all the states did not anticipate that potential. The debt was going to go that way. We still have some concerns over basically the lack of a regulatory framework.

And I think Gen Z, that's the one that.

It was talked about quite a bit sort of in the early days of these conversations.

There are.

Gen Z does seem to be experiencing a very pronounced effect from these cyclical headwinds and that makes sense to me I mean, those are the folks that are in their twenties for the most part and they don't have I don't have a lot of money in their wallet and with rent and all the things we've talked about over the quarters food and everything else they get hurt more than anyone else on that.

Speaker #8: And the need to ensure consumer safety. So those things they've net, I don't think that has a material impact on takeaway, but it's still there.

Lawson Whiting: There are tailwinds too, and it seems like the conversation has moved away from the tailwinds and is focused on the negative. I think Gen Z, that's the one that was talked about quite a bit, sort of in the early days of these conversations. There are, Gen Z does seem to be experiencing a very pronounced effect from these cyclical headwinds, and that makes sense to me. I mean, those are the folks that are in their 20s for the most part, and they don't have, they don't have a lot of money in their wallet, and with rent and all the things we've talked about over the quarters, food and everything else, they get hurt more than anyone else, and that tends to be the age group that consumes the most alcohol or has the highest per capita.

Speaker #8: So, look, there are tailwinds too. And it seems like the conversation has moved away from the tailwinds and is focused on the negative. And I think Gen Z, that's the one that was talked about quite a bit.

It tends to be the age group that consumes the most alcohol or has the highest per capita so.

Speaker #8: Sort of in the early days of these conversations. You know, there are Gen Z who seem to be experiencing, you know, a very pronounced effect from these cyclical headwinds.

That has been a headwind, but I do think.

Step back for a second and think a little bit longer term, we've still got Gen. Z is growing and there is global growth and the LDA drinking age and so that will be a tailwind.

Speaker #8: And that makes sense to me. I mean, those are the folks that are in their 20s for the most part, and they don't have a lot of money in their wallet.

Middle class consumers are still growing all they all around the world, but in many many many markets and we think that's a positive and even women.

Speaker #8: And with rent and all the things we've talked about over the quarters, food and everything else, they get hurt more than anyone else on that tends to be the age group that consumes the most alcohol or has the highest per capita.

Getting into spirits is another trend that has been around for quite a while but continue so.

Lawson Whiting: That has been a headwind, but I do think, step back for a second and think a little bit longer term. We've still got, Gen Z is growing, and there's global growth in the LDA drinking age, and so that will be a tailwind. Middle-class consumers are still growing, I want to say all around the world, but in many, many, many markets, and we think that's a positive. Even women getting into spirits is another trend that has been around for quite a while, but continues. It's a long answer. I still, I think sort of conclude and get off, get off the line here. It is a little bit of both. I think we've all accepted that. I don't, I don't want folks to exaggerate the structural end of things. I just, I don't truly believe that.

Look it's a long answer.

Speaker #8: So you know that has been a headwind, but I do think you know in step back for a second and think a little bit longer term.

I still I think sort of conclude and get off and get off the line here.

It is a little bit of both I think we've all accepted that.

Speaker #8: We've still got Gen Z growing, and there's global growth in the legal drinking age. So that will be a tailwind. Middle-class consumers are still growing.

I don't want folks to exaggerate the structural and if things I just I don't truly believes that so.

I was laughing earlier, because I think I've done more than 50 earnings calls in my career and it's the longest answer I've ever given sorry, I apologize for that but I do think truly it's probably the single most important question to ask on the long term health of the industry.

Speaker #8: All you know, honestly, all around the world, but in many, many, many markets. We think that's a positive. Even women getting into spirits is another trend that has been around for quite a while, but continues.

Speaker #8: So look, it's a long answer. I still, you know, think sort of conclude and get off the line here. It is a little bit of both.

And then hard to follow but to your first question Nadine <unk> back to the U S and the exit rate, what we would say is.

Speaker #8: I think we've all accepted that. But I don't want folks to exaggerate the structural end of things. I just, I don't truly believe that.

13, 14 states, including California, and transition every state has been unique.

Lawson Whiting: I was laughing earlier because I think I've done more than 50 earnings calls in my career, and that's the longest answer I've ever given. I apologize for that, but I do think truly it's probably the single most important question to ask on the long-term health of this industry.

Speaker #8: So I was laughing earlier because I think I've done more than 50 earnings calls in my career, and that's the longest answer I've ever given.

Collectively we probably did decelerate as we neared the August one transition date, there's noise even in our depletion based business due to these transitions and we do see in some of these states where there is a gap where takeaway is stronger than depletions and as we think about where we will.

Speaker #8: So, I apologize for that. But I do think, truly, it's probably the single most important question to ask on the long-term health of this industry.

Leanne Cunningham: Yeah, hard to follow, but to your first question, Nadine, back to the U.S. and the exit rate, what we would say is, you know, we've got 13, 14 states, including California, in transition. Every state has been unique. Collectively, we probably did decelerate as we neared the August 1 transition date. There's noise even in our depletion-based business due to these transitions. We do see in some of these states where there's a gap, where takeaway is stronger than depletions, and as we think about where we will be for the remainder of this first half, we would expect depletions to accelerate and shipments to lower, again coming in line with more of our full-year guidance.

Speaker #6: Yeah. And then, hard to follow, but to your first question, Nadine, back to the U.S. and the exit rate. What we would say is, you know, we've got 13 or 14 states, including California, in transition.

<unk> be for the remainder of this first half we would expect deflation to accelerate and shipments to lower again coming in line with with more of our full year guidance.

Speaker #6: Every state has been unique collectively. We probably did decelerate as we neared the August 1 transition date. There's noise, even in our depletion-based business, due to these transitions.

Yes, I don't happen pretty quick I think as we've shipped a bunch of Blackberry in the first quarter and I hadn't depleted any and so the depletions are coming and.

Speaker #6: We do see in some of these states where there's a gap, where takeaway is stronger than depletions. And as we think about where we will be for the remainder of this first half, we would expect depletions to accelerate and shipments to lower.

And we do it I think you said normalize here.

Fairly fast fashion.

Thank you one moment for our next question.

And our next question comes from the line of Andrea Teixeira of Jpmorgan. Your line is now open.

Speaker #6: Again, coming in line with more of our full-year guidance.

Thank you.

Lawson Whiting: Yeah, that ought to happen pretty quick, I think, as we've shipped a bunch of Blackberry in the first quarter and hadn't depleted any. The depletions are coming, and we do have, I think you said, normalize here in fairly fast fashion.

Thank you.

Speaker #4: Yeah, that all happened pretty quick, I think, as we've shipped a bunch of Blackberry in the first quarter and hadn't depleted any and so the depletions are coming.

Pray this for you and I wish you the best Thank you for.

Having the patience on teaching us more about brown Forman.

I wanted to go back to a bit about the segmentation.

Speaker #4: And we do have, I think you said, normalize here in fairly fast fashion.

Jack Dan is it specifically.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Andrea Teixeira of JP Morgan. Your line is now open.

Speaker #2: Thank you. One moment for our next question. And our next question concerns a line from Andrea Teixeira of JP Morgan. Your line is now open.

Just wondering if you can comment on.

And you did mention that you don't believe any stockholder trends, but of course like and then kind of like thinking about Permian, but you still have.

Andrea Teixeira: Thank you. Leanne, I'm going to add to all the praises for you and wishing you the best. Thank you for having the patience and teaching us more about Brown-Forman. I want to go back to a bit about the segmentation and Jack Daniel's specifically. Just wondering if you can comment on, Lawson, you did mention that you don't believe in any secular trends, but of course, like in the kind of like thinking about premiumization, but you still have a very decent volume on that, call it mainstream Jack Daniel's. Of course, it's a premium liquid, but I'm thinking of more as we see fragmentation in consumers on the RTD.

Speaker #7: Thank you, and Leanne, I'm going to ask you all for your praises for you and wishing you the best. Thank you for having the patience and teaching us more about Brown-Forman.

Maybe just on volume on that call.

Call it mainstream.

Hi, Jack day notice of course, it's a premium liquid, but I'm thinking of more as we say fragmentation and consumers.

Speaker #7: I want to go back to a bit about the segmentation and Jack Daniel's specifically. Just wondering if you can comment on Lawson? You did mention that you don't believe any secular trends, but of course, like in the kind of thinking about premiumization, you still have a very decent volume on that call at mainstream.

On the RTD is of course you have.

A very strong guard to do I'll frame.

But just thinking of long term how to attract the new.

The H.

Yes.

Consumers.

LDA consumers. Thanks Hao.

Can change that and how does that behave most recently, we've seen that number in terms of consumption of course, we can see your shipment, but in terms of consumption. How has have you exit.

Speaker #7: Jack Daniels, of course, it's a premium liquid. But I'm thinking of more as we see fragmentation and consumers on the RTDs, of course, you have a a very strong RTD offering.

Andrea Teixeira: Of course, you have a very strong RTD offering, but just thinking of long-term, how to attract the new LDA consumers is how you can change that and how does that behave most recently within that number in terms of consumption. Of course, we can see your shipments, but in terms of consumption, how have you exited, you know, your Jack Daniel's JD TW performance? Thank you.

Your.

Jack Daniels.

J D Tw performance.

Speaker #7: But just thinking long-term, how to attract the new LDH consumers. LDA consumers is how you can change that and how it behaves most recently within that number in terms of consumption.

Yes.

Well look I think if you're referring to just consumer takeaway of Jack relative to whether its Tds are riskier 100 other ways you can cut it.

Look we've we've been slowly narrowing the gap and it does it kind of depends how you look at it but we think we're gaining it met or gaining on Tds Tds.

Speaker #7: Of course, we can see your shipment, but in terms of consumption, how has have you exit you know your Jack Daniels JDTW performance? Thank you.

Look if you want to find it.

A green shoot out there and this is a small one you got to look hard to find it but GDS is getting has over the last four months four five months has gotten a little bit back we're talking tenths. So we're not taking jumps but.

Lawson Whiting: I think if you're referring to consumer takeaway of Jack relative to whether it's TDS or whiskey or, you know, 100 other ways you can cut it, we've been slowly narrowing the gap, and it does kind of depend how you look at it, but we think we're gaining on TDS. TDS, I mean, if you want to find a green shoot out there, and this is a small one, you got to look hard to find it, but TDS is getting, so the last four or five months, it's gotten a little bit better. We're talking 10th, so we're not taking jumps, but there are slight improvements in there.

Speaker #8: Well, look, I think if you're referring to consumer takeaway of Jack relative to whether it's TDS or whiskey or you know a hundred other ways you can cut it, look, we've we've been slowly narrowing the gap, and it does kind of depend how you look at it.

But there are there are slight improvements in there.

But if you look at and this is I think it's interesting looking at this a little bit ago. If you look at Nielsen by price point.

Speaker #8: But we think we're gaining it, gaining on TDS. TDS I mean, look, if you want to find a a a green shoot out there and this is a small one, you got to look hard to find it.

So if you look at the 20% to $29 price point.

That's cutting down.

Pretty closely so we don't spend a lot of time breaking up tds's too many ways, but were in line with that price point down between four and five tds's flattered very much bye.

Speaker #8: But TDS is getting has for the last four months, four or five months, has gotten a little bit better. You know we're talking tenths, so we're not taking jumps, but there are there are slight improvements in there.

The RTD is these days I think we all know that so we're doing okay within that within the largest brands in America. We always go to that top 20 list that Nielsen has Jack Daniel's, it's holding its own and there are two sort of right about average I'll say within all of those there is now I think we said three only three brands in the top 20 largest that are even growing right.

Lawson Whiting: If you look at, and this is, I think it's interesting, and we were just looking at this a little bit ago, if you look at Nielsen by price point, so you look at the $20 to $29 price point, that's cutting down pretty closely. We don't spend a lot of time breaking up TDS in too many ways, but we're in line with that price point, the down between four and five. TDS is flattered very much by the RTDs these days. I think we all know that. We're doing okay within that. Within the largest brands in America, we always go to that top 20 list that Nielsen has. Jack Daniel's is holding its own in there too, sort of right about average, I'll say, within all those.

Speaker #8: But if you look at this—and I think it's interesting—and we were just looking at this a little bit ago, if you look at Nielsen by price point, so you look at that $20 to $29 price point, that's cutting down pretty closely.

Speaker #8: So, we don't spend a lot of time breaking up TDS in too many ways, but we're in line with that price point. The down between four and five.

Alan Woodford is one of those and so we're happy about that but back to the health of Jack Daniel's, Tennessee Whiskey and how do you continue to sort of bring new consumers into the franchise I mean, the single biggest thing.

Speaker #8: TDS is flattered very much by the RTDs these days. I think we all know that. So we're doing okay with that. Within the largest brands in America, we always refer to that top 20 list that Nielsen has.

As we have really changed up our consumer communications over the last.

I don't know three three months or so has been.

Speaker #8: Jack Daniels, it's holding its own, and they are too. Sort of right about average, I'll say, within all those. There's now, I think we said three only three brands in the top 20 largest that are even growing right now, and Woodford is one of those.

With our new campaign, that's what makes Jack Jack in.

I think it's been very successful our initial.

Lawson Whiting: There's now, I think we said only three brands in the top 20 largest that are even growing right now, and Woodford is one of those. We're happy about that. Back to the health of Jack Daniel's Tennessee Whiskey and how do you continue to sort of bring new consumers into the franchise. The single biggest thing is we have really changed up our consumer communications over the last, I don't know, three months or so it's been. With our new campaign, that's what makes Jack Jack. I think it's been very successful. Our initial, you know, sort of feedback has been very, very successful.

Feedback has been very very successful in.

The one I won't spend a lot of time on all of the different consumer metrics, but the most important one in my mind at least.

Speaker #8: And so we're happy about that. But back to the health of Jack Daniels Tennessee whiskey and how do you continue to sort of bring new consumers into the franchise.

It seems would say this is a meaningful difference and thats where were actually seeing scores improved for the brand in.

Speaker #8: I mean, the single biggest thing is we have really changed up our consumer communications over the last, I don't know, three months or so it's been.

Jack Daniel's has such a unique set of attributes to it on the we werent playing up enough and now we've got it much more back end, where space that we can own and I think that is really really important for the long term health of the brand and then some of the things we said in our prepared remarks around Mclaren and we've gotten much better.

Speaker #8: With our new campaign, that's what makes Jack Jack. And I think it's been very successful. Our initial you know sort of feedback has been very, very successful.

Lawson Whiting: The one, and I won't spend a lot of time on all the different consumer metrics, but the most important one, in my mind at least, and I think teams would say this is a meaningful difference, and that's where we're actually seeing scores improve for the brand. Jack Daniel's has such a unique set of attributes to it, that we weren't playing up enough, and now we've got it much more back in where space that we can own. I think that is really, really important for the long-term health of the brand. Some of the things we said in our prepared remarks around McLaren, and we've gotten much bigger back into music again. We kind of had, we never really left it, but we were focusing on that quite a bit more. I don't think we've ever talked about our songwriters thing.

Speaker #8: And you know the one, and I won't spend a lot of time on all the different consumer metrics, but the most important one, in my mind at least, and I think teams would say this, is meaningful difference. That's where we're actually seeing scores improve for the brand.

Back into music again, we kind of hit.

Never really left it but.

We're focusing on that quite a bit more there as well.

Speaker #8: And you know that Jack Daniel's has such a unique set of attributes to it that we weren't playing up enough, and now we've got it much more back in where space that we can own.

We've ever talked about our song writers.

I think this is just kind of a fun.

Part of it but we host songwriters camp three times, a year down in <unk> and <unk>.

How many of you all our country music fans, but country music refers to Jack Daniel's all the time and the number of mentions we're getting installments has gone up meaningfully by trip.

Speaker #8: And I think that is really, really important for the long-term health of the brand. And then, as some of the things we said in our prepared remarks around McLaren, we've gotten much bigger back into music again.

Triple and quadruple kind of thing so.

Speaker #8: We kind of had— we never really left it, but we were focusing on that quite a bit more. There's a— I don't think we've ever talked about our songwriters thing.

We are still relevant with a lot of consumers, we're still very relevant in that space of country music and rock'n'roll, but I know that we've sort of within the country world taken off.

Lawson Whiting: I think this is just kind of a fun part of it, but we host songwriters camp three times a year down in Lynchburg. I don't know how many of you all are country music fans, but country music refers to Jack Daniel's all the time, and the number of mentions we're getting in songs has gone up meaningfully, like tripled and quadrupled kind of thing. We're still relevant with a lot of consumers. We're still very relevant in that space of country music and rock and roll, but I know that we've, you know, sort of within the country world taken off. Jack's Garage is a very popular experience that we're doing around the world now. We're pulling all the right triggers. I do believe that.

Speaker #8: I think this is just kind of a fun part of it, but we host songwriters camp three times a year down in Winchburg. And I don't know how many of you all are country music fans, but country music refers to Jack Daniel's all the time.

So Jack.

<unk> is a very popular.

The experience that we're doing around the world now so we're pulling all the right triggers I do believe that in.

Speaker #8: And the number of mentions we're getting in songs has gone up meaningfully—like tripled and quadrupled kind of thing. So we're still relevant with a lot of consumers.

I guess, the other one which we have talked about a little bit as more of the big key initiatives as we got to get the on premise in the well not only in the U S, but in our bigger markets.

Speaker #8: We're still very relevant in that space of country music and rock and roll, but I know that we've sort of, within the country world, taken off.

Again and that is important we have added a lot of resources to that particularly we called the Jack back, but it's about adding people to specifically focus only on the on trade and the most important cities in America, and we hit the big ones.

Speaker #8: So Jack's Garage is a very popular experience that we're doing around the world now. I believe that we are pulling all the right triggers.

And so dedicated focused people.

Lawson Whiting: I guess the other one, which we have talked about a little bit, is one of the big key initiatives is we got to get the on-premise in the, not only the U.S., but in our bigger markets going again. That is important. We have added a lot of resources to that, particularly we call it the Jack Pack, but it's about adding people to specifically focus only on the on-trade in the most important cities in America, and we hit the big ones. Dedicated, focused people, you know, will do that. I guess lastly, and I'll stop, we have all these new distributors. They are very excited to focus on Jack Daniel's Tennessee Whiskey. It's a huge brand, and anybody who's a sales guy in America is going to want to sell that brand. While we just did the transition, it's only been three weeks.

We will do that and I guess lastly, I'll stop.

Speaker #8: And you know, I guess the other one, which we have talked about a little bit, is one of the big key initiatives: we’ve got to get the on-premise in the, well, not only the U.S., but in our bigger markets going again.

We have all these new distributors. They are very excited to focus on Jack Daniel's, Tennessee Whiskey is a huge brand.

And anybody who has a sales guy and America is going to want to sell that brand and so well. We just did the transition it's only been three weeks so.

Speaker #8: And that is important. We have added a lot of resources to that, particularly what we call the Jackpack. It's about adding people to specifically focus only on the on-trade and the most important cities in America.

I would caution everyone to extrapolate too much about the first quarter Theres, just a lot of noise.

Speaker #8: And we hit the big ones. Dedicated, focused people, you know, will do that. And I guess lastly, and I'll stop, we have all these new distributors.

The system will settle down over the next few months I think and we'll see where things go and it's our job to get that.

Speaker #8: They are very excited to focus on Jack Daniel's Tennessee whiskey. It's a huge brand, and anybody who's a sales guy in America is going to want to sell that brand.

<unk> take away going again.

Thank you one moment for next question.

And our next question comes from the line of Andrea <unk> of Bank of America. Your line is now open.

Speaker #8: And so while you know we just did the transition, it's only been three weeks. So it's I would caution everyone to extrapolate too much about the first quarter.

Lawson Whiting: I would caution everyone to extrapolate too much about the first quarter. There's just a lot of noise. The system will settle down over the next few months, I think, and we'll see where things go, and it's our job to get that consumer takeaway going again.

Yes, Thank you and hi, I wanted to go back to Jack Daniel's Blackberry a minute, please which has been in the trade for a few weeks now you are sounding quite optimistic in the prepared remarks on the launch so could you give a bit more color may be on the response, you're getting from the trade on the pace of the rollout and what's the.

Speaker #8: There's just a lot of noise. The system will settle down over the next few months, I think, and we'll see where things go. And it's our job to get that consumer takeaway going again.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Andrea Pistacchi of Bank of America. Your line is now open.

Speaker #2: Thank you. One moment for our next question. And our next question concerns a line of Andrea Pistacchi of Bank of America. Your line is now open.

<unk> for Blackberry.

It could get.

I mean could it be as successful as other flavor launches like Apple fire, which reached two three or 400000 cases.

Andrea Pistacchi: Yes, thank you, and hi. I wanted to go back to Jack Daniel's Tennessee Blackberry a minute, please, which has been in the trade for a few weeks now. You were sounding quite optimistic in the prepared remarks on the launch. Could you give a bit more color maybe on the response you're getting from the trade and the pace of the rollout? What's the ambition for Blackberry? Do you think it could get as, I mean, could it be as successful as other flavor launches like Apple, Fire, which reach, look, two, three, four hundred thousand cases? I think you sort of mentioned this also in the prepared remarks about the potential for the brand to travel across geographies. Do you see potential as much for Blackberry to travel as you, as we've seen with other flavors? Thank you.

Speaker #7: Yes, thank you and hi. I wanted to go back to Jack Daniel's Blackberry a minute, please, which has been in the trade for a few weeks now.

And I think you sort of mentioned this also in the prepared remarks about the potential for the brand to travel across geographies, but do you see potential as much for Blackberry to travel as you as we've seen with other flavors. Thank you.

Speaker #7: You were sounding quite optimistic in the prepared remarks on the launch. So could you give a bit more color, maybe on the response you're getting from the trade and the pace of the rollout?

Speaker #7: And what's the ambition for Blackberry? Do you think it could be, I mean, could it be as successful as other flavor launches like Apple, Fire?

Yeah, I'll start with that and Wilson can build on for Blackberry, we are off to a really strong start and to your point, we have only in the second half of July started to get those shipments out there in preparation for the launch so there's really not a lot of depletion based information.

Speaker #7: Which reach not two, three, or four hundred thousand cases? I think you sort of mentioned this also in the prepared remarks about the potential for the brand to travel across geographies.

<unk> or consumer takeaway that we can comment on yet, but we can say that there is a significant amount of excitement in the system from our distributors. There is a lot of wonderful feedback and buzz that we're getting from both existing and new consumers customers media.

Speaker #7: But do you see potential as much for Blackberry to travel as we've seen with other flavors? Thank you.

Leanne Cunningham: Yeah, I'll start with that, and Lawson can build on. For Blackberry, we are off to a really strong start. To your point, we have only in the second half of July started to get those shipments out there in preparation for the launch. There's really not a lot of depletion-based information or consumer takeaway that we can comment on yet, but we can say that there is a significant amount of excitement in the system from our distributors. There's a lot of wonderful feedback and buzz that we're getting from both existing and new consumers, customers, and media. As we thought about this strategic innovation and we considered Blackberry, again, it is a natural flavor. It is found largely around the world. It fits with consumers' palates.

Speaker #6: Yeah, I'll start with that, and then I'll think of a build on. For Blackberry, we are off to a really strong start. And to your point, we have only in the second half of July started to get those shipments out there.

Thought about this strategic innovation and we we considered Blackberry again it is a natural flavor. It has found largely around the world it fits with consumers pallet.

Speaker #6: In preparation for the launch, there is really not a lot of depletion-based information or consumer takeaway that we can comment on yet. However, we can say that there is a significant amount of excitement in the system from our distributors.

And one thing we believe that.

We're strong here at Brown Forman and is globalizing these flavors.

<unk>.

Excuse me our existing network as we've done with honey and we've done with Apple and abuse Seemly, we actually had really strong results on Tennessee, Apple for this quarter as well. So we do believe this is a.

Speaker #6: There's a lot of wonderful feedback and buzz that we're getting from both existing and new consumers, customers, and media. As we thought about this strategic innovation, we considered BlackBerry.

Brand that we can globalize and then it will resonate well outside the U S theres not as much competition in flavored flavored based whiskies. So.

Speaker #6: Again, it is a natural flavor. It is found largely around the world. It fits with consumers' palates. One thing we believe we’re strong at here at Brown-Forman is globalizing these flavors, utilizing, excuse me, our existing network.

Leanne Cunningham: One thing we believe that we're strong here at Brown-Forman at is globalizing these flavors, utilizing, excuse me, our existing network, as we've done with honey and we've done with apple. If you've seen, we actually had really strong results on Tennessee Apple for this quarter as well. We do believe this is a brand that we can globalize and that it will resonate well. Outside the U.S., there's not as much competition in flavor-based whiskeys, so we're excited about what we'll be able to do with that. All of that will layer in.

We're excited about what we'll be able to do with that and again all of that will layer in over time, because we're just now and our very first week.

Speaker #6: As we've done with honey and as we've done with apple, if you've seen, we actually have really strong results on Tennessee apple for this quarter as well.

Shipping in the U S. Yes.

Yeah, and just to add to that I mean, the global Ness of it I think.

As lance at different than most of our competitors that are in this space and that's important we're going to use this as a growth driver or even multi years its not all blast in the world in Q1 so.

Speaker #6: So we do believe this is a brand that we can globalize and that it will resonate well outside the U.S. There’s not as much competition in flavor-based whiskey.

Not just Q1, but even this fiscal year, we intend to.

Speaker #6: So, we're excited about what we'll be able to do with that. And again, all of that will layer in over time because we're just now in our very first weeks of shipping in the U.S.

To spread this out with different sizes and different markets and all that kind of stuff. So we feel good at as a sort of a multi year growth driver.

Speaker 1: time because we're just now in our very first weeks of shipping in the U.S.

Lawson Whiting: Yeah, and just to add to that, I mean, the globalness of it, I think, is, it is, as Leanne said, different than most of our competitors that are in this space. That's important. We are going to use this as a growth driver over even multi-years. It's not all, not like we're blasting the world in Q1. Not just Q1, but even this fiscal year, we intend to, you know, just spread this out with different sizes and different markets and all that kind of stuff. We feel good at it as a sort of a multi-year growth driver. I'll add an anecdotal piece to it a little bit. One of the challenges in flavored whiskeys is the mixer. Like a lot of brands do shots, but there haven't been that many real natural mixers for a lot of the brands.

I'll add to Anika.

Speaker #8: Yeah, and just to add to that, I mean, the globalness of it, I think, is as Leanne said, different than most of our competitors that are in this space.

Anecdotally.

Piece to it a little bit one of the challenges in flavored whiskey has the mixer.

Speaker #8: And that's important. We are going to use this as a growth driver over even multi-years. It's not all like we're blasting the world in Q1.

A lot of brands do shocks, but.

There haven't been that many real natural mixtures for for a lot of the brands. This one has a great natural mix are eliminated.

Speaker #8: So not just Q1, but even this fiscal year, we intend to, you know, just spread this out with different sizes and different markets and all that kind of stuff.

My anecdotal, but I will tell you Blackberry and eliminate as a great to drink. It's been one of the best tasting flavored whiskey things I've ever tried in.

Speaker #8: So we feel good about it as a sort of a multi-year growth driver. I'll add an anecdotal piece to it a little bit. One of the challenges in flavored whiskeys is the mixer.

It works and we needed that to really sustain it as a long term growth driver and I think we've got it.

Thank you Margaret for next question.

And our next question comes from the line of Filippo <unk> of Citi. Your line is now open.

Lawson Whiting: This one has a great natural mixer in lemonade. That's my anecdotal, but I will tell you blackberry and lemonade is a great drink. It's been one of the best tasting flavored whiskey things I've ever tried, and it works. We've needed that to really sustain it as a long-term growth driver. I think we've got it.

Hi, everyone.

Yes, congrats and thank you for all the help throughout the years.

So maybe a question for you just on the gross margin.

You had the 40 basis point of gross margin expansion in the quarter.

Is the expectation for the year are still seeing some gross margin expansion on a full year basis, and maybe you can walk us through the components.

Speaker 3: Thank you. One moment for our next question. Our next question comes from the line of Filippo Foloni at Citi. Your line is now open.

Expansion on it seems acquisition and divestiture.

The biggest benefit and then on the other side if you can talk to the cost side.

Speaker 4: Hi, everyone. Leanne, congrats and thank you for all the help throughout the years. Maybe a question for you, Leanne, just on the gross margin. You had the 40 basis points of gross margin expansion in the quarter. Is the expectation for the year still seeing some gross margin expansion on a full-year basis? Maybe you can walk us through the components, how to get to expansion. It seems acquisition and divestiture should be the biggest benefit. On the other side, if you can talk to the cost side, both on the commodity part, but also the used barrel sales, negative impact on margins. That would be helpful. Thank you.

Both on the commodity part, but also the used barrel sales negative impact on margins that would be helpful. Thank you.

Okay. So first of all I'd say, we're off to a really strong start for our.

Fiscal year, we our margins are well positioned with 40 basis points of expansion in the first quarter to $59. Eight we are giving you kind of a breakdown for that so I won't go back through that.

Full year perspective for 2006.

Yes, we're going to continue to benefit from the absence of Finlandia and <unk>. The absence of those TSA is as well as the absence of <unk>.

Speaker 1: Okay. First of all, I would say we're off to a really strong start for our fiscal year. Our margins are well positioned with 40 basis points of expansion in the first quarter to 59.8%. We've given you kind of the breakdown for that, so I won't go back through that. From a full-year perspective for 2026, yes, we're going to continue to benefit from the absence of Finlandia and the Sonoma-Cutrer, the absence of those transition service agreements, as well as the absence of Korbel. We do believe our price mix will largely offset our cost. As we said in our prepared remarks, our costs are really driven by the impact of inflation on our input cost and then lower production volumes. We are still benefiting from some lower agave costs, but that's being offset by the two things that I just mentioned.

We do believe our price mix will largely offset our cost and then as we said in our prepared remarks.

Our costs are really driven about the impact of inflation on our input cost and then lower production volumes. We are still benefiting from some lower agave cost, but that's being offset by the two things that I just mentioned.

As it relates to used barrels.

Again, we're coming off three very strong years of sales at 25 being our strong this year. So now as we normalize.

That high margin business and the absence of that all of that is built into the guidance that we have provided for the full year.

Thank you Mahmud for next question.

Speaker 1: As it relates to used barrels, again, we are coming off three very strong years of sales, 2025 being our strongest year. Now, as we normalize that high margin business and the absence of that, all of that is built into the guidance that we have provided for the full year.

And our next question comes from the line of Eric <unk> of Morgan Stanley. Your line is now open.

Good morning, everyone.

And congratulations it's been a pleasure working with you and looking forward to co staying down in Lynchburg in October.

Question for Austin.

What are you seeing in terms of the competitive and promotional environment.

Speaker 3: Thank you. One moment for our next question. Our next question comes from a line of Eric Serotta of Morgan Stanley. Your line is now open.

Last quarter, you commented I think that surprisingly everyone had been pretty rational thus far.

Operator: Good morning, everyone. Leanne, congratulations. It's been a pleasure working with you and looking forward to toasting down in Lynchburg in October. Question for Lawson. What are you seeing in terms of the competitive and promotional environment? Last quarter, you commented that, you know, surprisingly, everyone had been pretty rational thus far. I know first quarter typically isn't a heavy promo period, but any additional color would be helpful. As a consumer, I'm seeing more allocated bourbons on the shelf. I'm not talking like the $200 suggested retail price bottles that would sell for a few thousand, marked up. I'm talking bottles in the $30 to $60 range that, for the past few years, you couldn't find, or if you did, they were a couple hundred dollars. Are you seeing that in terms of your and competitor allocated products, leaving Birthday Bourbon aside?

No.

First quarter typically isn't a heavy promo period, but.

Any additional color would be helpful.

And then sort of as a consumer I'm seeing more allocated bourbon on the shelves. So I'm not talking like the $200 suggested retail price bottles that would sell for a few thousand.

<unk> marked up.

Talking bottles in the 30% to $60 range that for.

For the past few years, you couldnt find or if you did they work.

$100 or you see a are you seeing that in terms of your end competitor allocated products, leaving birthday Bourbon aside.

And.

B is that having any impact you think on brands like Woodford and old Forester.

Thank you.

That's a good question.

Look.

Step back perhaps second metal directly answer your question.

I think we've said on these calls a number of times American whiskey and tequila, even the two categories that serve.

Or offer the best Super premium Ultra premium line extensions.

Operator: Is that having any impact, do you think, on brands like Woodford Reserve and Old Forester? Thank you.

Particularly as American whiskey, largely because of the barrel theres. So many different things that you can do we consider consider ourselves.

Leaders in that space and we've had a lot of very unique and very successful innovations overtime. So you're right. I mean, there are look everyone not everyone, but I mean people the big brands have seen lot of which we have led.

Lawson Whiting: That's a good question. Look, I stepped back for a half a second, and then I'll directly answer your question. As I think we've said on these calls a number of times, American whiskey and then tequila, even the two categories that serve or offer the best super premium, ultra premium line extensions, you know, particularly as American whiskey, largely because of the barrel. There's so many different things that you can do. We consider ourselves, you know, to be leaders in that space. We've had a lot of very unique and very successful innovations over time. You're right.

Have seen what you can do with some of these hiring line extension doubled by far being.

I think it would be our most successful line extension that we've probably ever done so.

Particularly as American whiskey, largely because of the barrel theres. So many different things that you can do we consider consider ourselves to be leaders in that space and we've had a lot of very unique and very successful innovations over time. So you are right. I mean, there are look everyone not everyone, but I mean people the big brands.

Theres lots of exciting things in that space. Jack Daniel's has its 10 year old. Its 12 year old is 14 year old talk about allocated I mean, there is the demand is.

Lawson Whiting: I mean, there are, look, everyone, not everyone, but I mean, people, the big brands have seen, a lot of which we have led, have seen what you can do with some of these higher line extensions, Double Oak by far being, I say that, I think it would be our most successful line extension that we've probably ever done. There's lots of exciting things in that space. Jack Daniel's has its 10-year-old, its 12-year-old, its 14-year-old. Talk about allocated. I mean, the demand is, you know, a matter of many, many times more than we have supply for. There's a number of them in the Woodford Reserve kettle and even Old Forester. You mentioned Birthday Bourbon, but we have others in President's Choice and some other really highly desired line extensions. Yeah, I think you will continue to see those.

Many many times more than we have supply for and Theres a number of them in the Woodford Cana and even old Forester, you mentioned birthday, Bourbon, but we have others.

<unk> has seen a lot of which we have led.

And President's choice and some other really highly desired line extension so.

I have seen what you can do with some of these hiring line extension double load by far being.

So yes, so I mean, I think you will continue to see those thats a price points that we obviously love to play in.

I think it would be our most successful.

Extension that we've probably ever done so.

Theres lots of exciting things in that space. Jack Daniel's has its 10 year old its 12 year old is a 14 year old talk about allocated I mean, there is the demand as a matter of many many times more than we have supply for and Theres a number of them in the Woodford Cana and even old Forester, you mentioned birthday, Bourbon, but we have others.

And we think we'll do quite well with that shorter term question. You had started asking have you seen.

There is difference in promotions because theres more brands on the on the shelf necessarily but pricing has continued to be fairly.

Fairly rational.

Sheila as I think everyone has said it seems to be the most aggressive for obvious reasons, but American whiskey is holding up there again the category I think overall looking at it's flat pricing is flat. So in the last 13 weeks and Nielsen So.

President's choice and some other really highly desired line extension so.

So yes, so I mean, I think you will continue to see those thats a price points that we obviously love to play in.

Lawson Whiting: That's a price point, you know, that we obviously love to play in, and we think we'll do quite well with that. Now, shorter term question you had started to ask, have you seen, I mean, there's difference in promotions because there's more brands on the, you know, on the shelf necessarily, but pricing has continued to be fairly rational. Tequila is, I think everyone has said, seems to be the most aggressive for obvious reasons, but American whiskey is holding up there again. The category, I think overall, I'm looking at it as flat. Pricing is flat. In the last 13 weeks in Nielsen, there were all these, there was a lot of scares, and I think we've talked about quite a bit, actually, in the last few calls about the industry, and supply.

There with all of these there was a lot of scares and I think we've talked about quite a bit actually in the last few calls about the industry and.

And we think we'll do quite well with that shorter term question. You started asking have you seen.

There is difference in promotions because theres more brands on the on the shelf necessarily but pricing has continued to be fairly rational tequila as I think everyone has said seems to be the most aggressive.

Supply is that going to is that supply going to eventually dragged down.

Pricing overall and that's the part that I think is rational and it's still rational.

Quarter over quarter, we've not seen much change in the way of pricing so.

These reasons, but American whiskeys holding up there again the category I think overall looking at it's flat pricing is flat. So in the last 13 weeks and Nielsen So.

Certainly consider that good news in terms of the industry supply question No. One asked so I'll give you the answer anyway.

It does seem to be rational.

With all these there was a lot of scares and I think we've talked about quite a bit actually in the last few calls about the industry.

As everybody knows that there are literally literally thousands of brands across the United States and those entrepreneurial led brands are having a hard time.

Lawson Whiting: Is that going to, is that supply going to eventually drag down, you know, pricing overall? That's the part that I think is rational, and it's still rational. Quarter over quarter, we've not seen much change in the way of pricing. We certainly consider that good news. In terms of the industry slide question that no one asked, I'll give you the answer anyway. It does seem to be rational. Everybody knows that there are literally thousands of brands across the U.S., and those entrepreneurial-led brands are having a hard time. They're having a really hard time, and there's a lot of them going out of business. The shelves are still very, very crowded in both American whiskey and tequila, but I do think over time that is starting to reduce. Thankfully, we wanted some shelf space back again. I think that is a dynamic that is happening.

And supply is that going to does that supply going to eventually dragged down pricing.

A really hard time and Theres a lot of them going out of business. The shelves are still very very crowded in both American whiskey and tequila, but I do think over time that is starting to.

Pricing overall and Thats the part that I think is rational and it's still rational.

Quarter over quarter, we've not seen much change in the way of pricing so.

Certainly consider that good news in terms of India. The industry supply question that no one asked but I'll give you the answer anyway.

Reduce and so.

Thankfully, but.

We will have some shelf space back again so.

Sure.

It does seem to be rational I mean, the as.

I think that is a dynamic that is happening, but as I've said, they never really got to meaningful market share and it's still the big I don't know five or six companies that control the industry supply and everyone has throttle back so.

Everybody knows that there are literally literally thousands of brands across the United States and those entrepreneurial led brands are having a hard time.

And then a really hard time and Theres a lot of them going out of business. The shelves are still very very crowded in both American whiskey and tequila, but I do think over time that is starting to.

I think you all would be surprised at how quickly these things come in line, especially if we get some volume growth but.

But everyone has throttled back quite a bit.

Reduce and so.

Yes.

Thankfully, but.

So I think that risk.

We will have some shelf space back again so.

Is less than it was maybe six months ago or a little bit longer ago than that.

I think that is a dynamic that is happening, but as I've said, they never really got to meaningful market share and it's still the big I don't know five or six companies that control the industry supply and everyone has throttle back so I.

Lawson Whiting: As we've said, they never really got to meaningful market share, and it's still the big, I don't know, five or six companies that control the industry supply, and everyone has throttled back. I think you all would be surprised at how quickly these things come in line, especially when we get some volume growth. Everyone has throttled back quite a bit. I think that risk is less than it was maybe six months ago or a little bit longer ago than that.

Thank you one moment for our next question.

Yeah.

And our next question comes from the line of Kevin Grundy of BNP Paribas. Your line is now open.

I think you all would be surprised at how quickly these things come in line, especially if we get some volume growth but.

Great. Thanks morning, everyone, Lee and I would like to extend my congratulations and best wishes to you in retirement of course as well.

But everyone has throttled back quite a bit and so I think that risk.

A question for both of you. This is kind of zooming out more and more 20000 foot, but just so so loss of the approach to driving growth in the portfolio now geographically I. Appreciate the time you spent.

Is less than it was maybe six months ago or a little bit longer ago than that.

Speaker 3: Thank you. One moment for our next question. Our next question comes from the line of Kevin Grundy of VMB Perrywood. Your line is now open.

Thank you one moment for our next question.

Talking about some of the success you've had in Brazil in emerging markets.

And our next question comes from the line of Kevin Grundy of BNP Paribas. Your line is now open.

We kind of look at or contemplate in the market contemplate your ability to kind of get back to that longer term algorithm I think theres a lot of skepticism as youre well aware it would be a strategy seemingly much more reliant on emerging markets than it has been in the past. So is there an opportunity to accelerate the pace how do you think about it.

Susanne Perram: Great. Thanks. Morning, everyone. Leanne, I'd like to extend my congratulations and best wishes to you in retirement, of course, as well. Question for both of you. This is kind of zooming out more 20,000 foot, but just so, Lawson, the approach to driving growth in the portfolio now geographically, I appreciate the time you spent talking about some of the success you've had in Brazil and emerging markets. As we kind of look at or contemplate and the market contemplates your ability to kind of get back to that longer-term algorithm, and I think there's a lot of skepticism, as you're well aware, it would be a strategy seemingly much more reliant on emerging markets than it has been in the past. Is there an opportunity to accelerate the pace? How do you think about investment levels from a portfolio approach, particularly when you look at the U.S.

Great. Thanks morning, everyone Lee and I.

I'd like to extend my congratulations and best wishes to you in retirement of course as well.

A question for both of you. This is kind of zooming out more 20000 foot, but just so so loss and the approach to driving growth in the portfolio now geographically I. Appreciate the time you spent.

Investment levels from a portfolio approach, particularly when you look at the U S and developed markets and you are well aware of what the market is sort of pricing in the market is of the view. This is much more structural in nature than cyclical so I'd love to get your thoughts on your ability to really lean in on emerging markets and accelerate the pace of growth is that.

Talking about some of the success <unk> had in Brazil in emerging markets and as.

As we kind of look at or contemplate in the market contemplate your ability to kind of get back to that longer term algorithm. I think there is a lot of skepticism as youre well aware it would be a strategy seemingly much more reliant on emerging markets than it has been in the past. So is there an opportunity to accelerate the pace how do you think about.

Becomes increasingly important and then what does that mean in terms of the achieve ability of your long term guidance. So a lot in there, but I'd love your thoughts. Thank you.

Great question. It is we are internally spending a lot of time thinking about that and talking about it and it is what if this environment.

Investment levels from a portfolio approach, particularly when you look at the U S and developed markets and you are well aware of what the market is sort of pricing in the market is of the view. This is much more structural in nature than cyclical so I'd love to get your thoughts on your ability to really lean in on emerging markets and accelerate the pace of growth is there.

Susanne Perram: and developed markets? You're well aware of what the market is sort of pricing in, and the market is of the view this is much more structural in nature than cyclical. I'd love to get your thoughts on your ability to really lean in on emerging markets and accelerate the pace of growth as that becomes increasingly important. What does that mean in terms of the achievability of your long-term guidance? A lot in there, but I'd love your thoughts. Thank you.

<unk> established big markets.

I don't see it being a declining market is don't believe thats, even medium term outlook, but does it get back to four to five.

That's such a hard question to answer and I don't really have a crystal ball and I know some folks are.

That becomes increasingly important and then what does that mean in terms of the achieve ability of your long term guidance. So a lot in there, but I'd love your thoughts. Thank you.

Coming out loud, saying, making some predictions on that but I'm not going to do that.

Lawson Whiting: I mean, it's a great question. It is, we are, you know, internally spending a lot of time thinking about that and talking about it. It is what, you know, if this environment in the established big markets, you know, I don't see it being a declining market. I just don't believe that's the even medium-term outlook. Does it get back to four to five? I mean, that's such a hard question to answer. I don't really have a crystal ball. I know some folks are coming out loud saying, making some predictions on that, but I'm not going to do that. I do think, you know, we've talked a lot about if it's a lower growth environment, how does your portfolio look? Are there differences you want to make there? Within geographies, probably even more so, what would you do?

But I do think we've talked a lot about if it is a lower growth environment. How does your portfolio look are there differences you want to make there within geographies, probably even more so what would you do and we are naturally going to allocate more resources into these emerging markets because it's not only in Brazil.

That's a great question and it is but we are in.

<unk> spending a lot of time thinking about that and talking about it and it is what.

If this environment in the established big markets.

Don't see it being a declining market is don't believe thats, even medium term outlook, but does it get back to four to five.

That is growing we have plenty in Turkey and the UAE.

Such a hard question to answer and I don't really have a crystal ball and I know some folks are.

We have big eyes on on Asia in particular, India, which were relatively small so that would be a good example of a market.

Coming out loud, making some predictions on that but I'm not going to do that but.

These incremental resources and we think.

But I do think we've talked a lot about if it's a lower growth environment. How does your portfolio look are there differences you want to make there, but within geographies, probably even more so what would you do and we are naturally going to allocate more resources into these emerging markets because it's not only in Brazil.

There is a meaningful opportunity there and so.

I don't want to say that we're reallocating away from like the U S. Because it's still the most profitable biggest premium all those types of things, we'd be crazy to try to tobacco away from that opportunity there.

Lawson Whiting: We are naturally going to allocate more resources into these emerging markets because it's not only Brazil, you know, that is growing. We have plenty in Turkey and UAE, and we have big eyes on Asia and particularly India, which we're relatively small. That would be a good example of a market that needs incremental resources. We think, you know, there is a meaningful opportunity there. I don't want to say that we're reallocating away from the U.S. because it's still the most profitable, biggest premium, all those types of things. We'd be crazy to try to back away from that opportunity there, which I just still think we've got the portfolio that fits the U.S. consumer really, really well. We don't want to back away from that. We want to make sure that we get our fair share of that.

That is growing we have plenty in Turkey and the UAE.

Just still think we've got the portfolio that fits the U S consumer really really well and so we don't we don't want to back away from that we want to make sure that we get our fair share of that so.

We have big eyes on on Asia in particular, India, which were relatively small so that would be a good example of a market that needs incremental resources and we think.

But yes, I do think in terms of emerging markets going forward is for Mexico in all of South America has been where we've been the most successful in the last few years.

There is a meaningful opportunity there and so.

I don't want to say that we're reallocating away from like the U S. Because it's still the most profitable biggest premium all those types of things, we'd be crazy to try to tobacco away from that opportunity there.

We will continue to fuel that the momentum is still there and so we're continuing to do there I mentioned India.

<unk>.

It sounds strange to talk about the middle East, but there is a growing business there that is actually there.

Just still think we've got the portfolio that fits the U S consumer really really well and so we don't we don't want to back away from that we want to make sure that we get our fair share of that so, but yes, I do think in terms of.

We feel pretty good about that and then.

Asia still has all of the opportunities that we need to find a way to correct that and that will be a big one and then Japan I.

Lawson Whiting: I do think, in terms of emerging markets going forward, it's from Mexico and all of South America has been where we've been the most successful in the last few years, and we will continue to fuel that. The momentum is still there, and so we'll continue to do that. I mentioned India. You know, it sounds strange to talk about the Middle East, but there is a growing business there that is actually there, and we feel pretty good about that. Then, you know, Asia still has all the opportunities that we need to find a way to crack that. That will be a big one. Japan, I think you all know, we just put our own sales force in place about a year ago, and so we're getting our, you know, I mean, we're getting up and going there.

Merging markets going forward, it's from Mexico, and all of South America has been where we've been the most successful in the last few years.

I think you all know we just put our own sales force in place for about a year ago.

And so we're getting our.

And we will continue to fuel that the momentum is still there and so we're continuing to do there I mentioned India.

We're getting up and going there and it's a challenging market on a lot of levels, but it's a huge bourbon market is a very very premium markets and now we're much better positioned to be able to get our share of that.

It sounds strange to talk about the middle East, but there is a growing business there that is actually there.

Thank you Amit for next question.

We feel pretty good about that and then.

Yes.

Asia still has all the opportunities that we need to find a way to correct that and that will be a big one and then Japan.

And our next question comes from the line of Bonnie Herzog of Goldman Sachs. Your line is now open.

Alright. Thank you good morning, and congrats and best of luck Leann.

Thank you all know, we just put our own sales force in place about a year ago.

Wanted to ask a couple of things first shipments as we've discussed we're well ahead of Depletions in Q1.

And so we're getting our.

Lawson Whiting: It's a challenging market on a lot of levels, but it's a huge bourbon market. It's a very, very premium market. Now we're in a much better position to be able to get our share of that.

We're getting up and going there and it's a challenging market on a lot of levels, but it's a huge bourbon market. It's a very very premium markets and now we're much better positioned to be able to get our share of that.

As a result.

That's certainly a benefit to organic sales in the quarter, but could you quantify for us the EBIT impact of that load in in Q1.

Speaker 3: Thank you. One moment for our next question. Our next question comes from a line of Bonnie Herzog of Goldman Sachs. Your line is now open.

Thank you Mahmud for next question.

And then second I guess I was hoping for some more color on your price mix in the quarter I think it was down around 5%. So could you maybe just touch on the drivers of that.

Yeah.

And our next question comes from the line of Bonnie Herzog of Goldman Sachs. Your line is now open.

Speaker 1: Hi. Thank you. Good morning and congrats and best of luck, Leanne. I wanted to ask a couple of things. First, you know, shipments, as we've discussed, are well ahead of depletions in Q1. As a result, you know, this was certainly a benefit to organic sales in the quarter. Could you quantify for us the EBIT impact of that load-in in Q1? Second, I guess I was hoping for some more color on your price mix in the quarter. I think it was down around 5%. Could you maybe just touch on the drivers of that and, you know, again, how we should maybe think about price mix for the rest of the year? Thank you.

Alright. Thank you good morning, and congrats and best of luck Leann I wanted to ask a couple of things first shipments as we've discussed we're well ahead of Depletions in Q1.

How we should maybe think about price mix for the rest of the year. Thank you.

To your first question if Youll take a look at the bottom of schedule a day, we try to provide that all the way through the P&L. So you can see that.

As a result.

Certainly a benefit to organic sales in the quarter, but could you quantify for us the EBIT impact of that load in in Q1.

That information that Youre looking for is there and then from a price mix perspective, a lot of it is about price mix I'm, sorry, as far as like Nick as far as the higher.

And then second I guess I was hoping for some more color on your price mix in the quarter I think it was down around 5%. So could you maybe just touch on the drivers of that.

Growth of new mix and lower used barrel sales that we had partially offset by the launch of our Jack Daniels, Tennessee Blackberry.

How we should maybe think about price mix for the rest of the year. Thank you.

Lawson Whiting: To your first question, if you'll take a look at the bottom of Schedule D, we try to provide that all the way through the P&L so you can see that the information that you're looking for is there. From a price mix perspective, a lot of it is about price mix. I'm sorry, as far as mix, as far as the higher growth of New Mix and the lower used barrel sales that we had, partially offset by the launch of our Jack Daniel's Tennessee Blackberry.

To your first question if Youll take a look at the bottom of schedule a day, we try to provide that all the way through the P&L. So you can see that.

And I think I don't know if I misheard you Bonnie.

On or whatever this is the gross margin slide that we have in the deck the price mix impact at least on gross margin was <unk> five.

That information that Youre looking for is there and then from a price mix perspective, a lot of it is about price mix I'm, sorry, as far as like next as far as the higher.

Five.

Thank you.

Thank you. This concludes the question and answer session I would now like to turn it back to Sue for closing remarks.

Growth of new mix and lower used barrel sales that we had partially offset by the launch of our Jack Daniels, Tennessee Blackberry.

Thank you and thank you welcome and Leann and thanks to everyone for joining us today for Brown <unk> first quarter fiscal year 2026 earnings call. If you have any additional questions. Please contact us.

Lawson Whiting: I don't know if I misheard you, Bonnie, but on the gross margin slide that we have in the deck, the price mix impact, at least on gross margin, was 0.5, not 5.

And I think I don't know if I misheard you Bonnie.

On or whatever this is the gross margin slide that we have in the deck the price mix impact at least on gross margin was <unk> 5 million.

We look forward to participating in the Barclays Global Consumer Staples Conference next week and hope to see many of you for those of you unable to attend our fireside chat on Wednesday will be made available as a webcast accessible via the brown Forman corporate website under the section titled investors events and presentations.

Five.

Speaker 3: Thank you.

Lawson Whiting: That's what you.

Thank you.

Speaker 3: Thank you. This concludes the question and answer session. I'll now turn it back to Susanne Perram for closing remarks.

Okay.

Thank you. This concludes the question and answer session I would now like to turn it back to Sue for closing remarks.

Peter Graham: Thank you. Thank you, Lawson and Leanne. Thanks to everyone for joining us today for Brown-Forman Corporation's first quarter fiscal year 2026 earnings call. If you have any additional questions, please contact us. We look forward to participating in the Barclays Global Consumer Staples Conference next week and hope to see many of you. For those of you unable to attend, our fireside chat on Wednesday will be made available as a webcast, accessible via the Brown-Forman Corporation corporate website under the section titled Investors, Events, and Presentations. To wrap things up, the story of Jack Daniel's begins on a day in September about midway through the 19th century, but no one can agree on exactly what day he was born. One thing we do agree on, though, is that Jack's birthday is certainly something to celebrate.

Thank you and thank you welcome and Leann and thanks to everyone for joining us today for Brown <unk> first quarter fiscal year 2026 earnings call. If you have any additional questions. Please contact us.

To wrap things up the story of Jack Daniel's begins on a day in September about midway through the 19th century, but no. One can agree on exactly what day. He was born one thing we do agree on though is that Jack birthday is certainly something to celebrate and since we don't know the exact date, we choose to celebrate any day in September so we hope you'll join us in raising a glass.

We look forward to participating in the Barclays Global Consumer Staples Conference next week and hope to see many of you for those of you unable to attend our fireside chat on Wednesday will be made available as a webcast accessible via the Brown Forman corporate web site under the section titled investors events and presentations.

Whichever date, you choose as we say happy birthday to Jack with that this concludes our call.

Thank you for your participation in today's conference. This concludes the program you may now disconnect.

To wrap things up the story of Jack Daniel's begins on a day in September about midway through the 19th century, but no. One can agree on exactly what day. He was born one thing we do agree on though is that Jack birthday is certainly something to celebrate and since we don't know the exact date, we choose to celebrate any day in September so we hope you'll join us in raising a glass.

Peter Graham: Since we do not know the exact date, we choose to celebrate any day in September. We hope you'll join us in raising a glass, whichever day you choose, as we say happy birthday to Jack. With that, this concludes our call.

Whichever day, you choose as we say happy birthday to Jack with that this concludes our call.

Speaker 3: Thank you for your participation in today's conference. This concludes the program. You may now disconnect.

Thank you for your participation in today's conference. This concludes the program you may now disconnect.

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