Beam Reports 2013 Fourth Quarter and Full Year Results

Strong Growth for Premium Whiskeys and Innovations Drives Fourth Quarter Performance • Full-Year Sales Reach Record on Above-Market Growth in North America and Europe • Earnings Growth Exceeds Company’s 2013 Target Range • Proposed Transaction with Suntory Holdings Remains on Track to Close in Second Quarter

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Beam Reports 2013 Fourth Quarter and Full Year Results

Deerfield, Illinois, February 5, 2014 – Beam Inc. (NYSE: BEAM), a leading global premium spirits company, today reported results for the fourth quarter and full year 2013.  

For the full year 2013, reported net sales increased 4% to a record $2.55 billion. Net sales for the year were up 2% on a comparable basis, which adjusts for foreign exchange and acquisitions/divestitures.  A challenging year-over-year comparison in India adversely impacted full-year comparable sales by approximately one point.  Beam’s full-year sales benefited from market outperformance in North America and Europe/Middle East/Africa, partly offset by lower sales in Asia Pacific/South America.  New products and positive price/mix enhanced the company’s top-line growth.    

On a reported basis (GAAP), full-year diluted earnings per share from continuing operations were $2.24 versus $2.51 in 2012.  Full-year results were impacted by a net charge of 39 cents per share related to items including early extinguishment of debt and a fourth-quarter non-cash impairment of a tradename in Spain.  

Full-year diluted EPS before charges/gains was $2.63, up 10%, exceeding the company’s 2013 target for high-single-digit growth.  Earnings benefited from sales growth, operating margin improvement and lower interest expense.   The company generated free cash flow of 

$332 million in 2013, exceeding the high end of its target range.  

For the fourth quarter, reported net sales increased 4% and net sales were up 5% on a comparable basis.  Comparable fourth quarter sales growth benefited from strong demand for the company’s premium whiskey and tequila brands, successful new-product innovations, and an 

approximate one point benefit from a return to growth in India.  Comparable sales in the quarter reflected market outperformance in North America and Europe, which more than offset continued softness in the Australia market.  

Diluted EPS from continuing operations for the quarter was down 29% on a reported basis.  Diluted EPS before charges/gains for the quarter was $0.77, up 15%.  

Better-than-Expected Finish to Another Strong Year

“Beam closed a strong year with a better-than-expected quarter that benefited from accelerated growth for premium brands and cost containment,” said Matt Shattock, president and chief executive officer of Beam.  “For the full year, we delivered excellent performance in premium whiskey – led by Bourbon, Canadian, single-malt Scotch and Irish – as well as in Tequila.  We’re pleased we exceeded the high-single-digit earnings target range we established at the start of 2013 and delivered another year of double-digit growth in diluted earnings per share before charges/gains.   The worldwide Beam team can be very proud of these results and the shareholder value that Beam has created over the past several years, which is underscored by the transaction we’ve entered into with Suntory Holdings.”

Financial Highlights for the Full Year 2013:

  • Income from continuing operations was $365.5 million, or $2.24 per diluted share, versus $2.51 per diluted share in 2012. 
  • Excluding charges and gains, diluted EPS from continuing operations was $2.63, up 10% from $2.40 in 2012.
  • Reported net sales were a record $2.55 billion (excluding excise taxes), up 4%.  
  • On a comparable basis, which adjusts for foreign exchange and acquisitions/divestitures, net sales were up 2%.
    • Comparable net sales by segment: 
      • North America +5%
      • Europe/Middle East/Africa (EMEA) +6%
      • Asia Pacific/South America (APSA) -9%. Segment results were adversely impacted by lower sales in Australia and a challenging year-over-year comparison in India.  
  • Operating income was $617.1 million, up 8%.
  • Operating income before charges/gains was $667.6 million, up 6%.  
  • The company generated free cash flow of $332 million.

Financial Highlights for the Fourth Quarter:

  • Income from continuing operations was $91.6 million, or $0.56 per diluted share, versus $0.79 in the year-ago quarter. 
  • Excluding charges and gains, diluted EPS from continuing operations was $0.77, up 15% from $0.67 in the year-ago quarter.
  • Reported net sales were $739.5 million (excluding excise taxes), up 4%.  
  • On a comparable basis, which adjusts for foreign exchange and acquisitions/divestitures, net sales were up 5%.
    • Comparable net sales by segment: 
      • North America +6%
      • Europe/Middle East/Africa (EMEA) +9%
      • Asia Pacific/South America (APSA) -5%.
  • Operating income was $134.9 million, down 14%.
  • Operating income before charges/gains was $189.9 million, up 7%.  
Update on Proposed Transaction with Suntory Holdings
 
“We look forward to completion of the proposed acquisition of Beam Inc. by Suntory Holdings,” Shattock said.  “The proposed transaction remains on track to close in the second quarter of 2014.” Beam has filed its preliminary proxy statement with the SEC related to the transaction, and the date for a shareholder vote will be announced when Beam files the definitive proxy statement in the coming weeks.  The transaction also remains subject to regulatory clearance in the United States and the European Union.  
 
In light of the pending transaction, the company is not providing public targets for 2014 earnings and free cash flow and not holding a conference call today.
 
Key Brand Performance 
Comparable net sales growth, full year 2013: 

 

Comparable

Net Sales Growth (1)

Power Brands

+4%

    Jim Beam

+3%

    Maker’s Mark

+17%

    Sauza

+3%

    Pinnacle

+0%

    Courvoisier

-2%

    Canadian Club

+10%

    Teacher’s

-7%

 

 

Rising Stars

+2%

    Laphroaig

+21%

    Knob Creek

+14%

    Basil Hayden’s

+29%

    Kilbeggan

+2%

    Cruzan

+2%

    Hornitos

+12%

    Skinnygirl

-26%

    Sourz

+0%

 

 

Local Jewels

-8%

 

 

Value Creators

-2%

 

 

Total (2)

+2%

 

Results include ready-to-drink products

 

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

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

 

About Beam Inc.

As one of the world’s leading premium spirits companies, Beam is Crafting the Spirits that Stir the World.  Consumers from all corners of the globe call for the company’s brands, including Jim Beam Bourbon, Maker's Mark Bourbon, Sauza Tequila, Pinnacle Vodka, Canadian Club Whisky, Courvoisier Cognac, Teacher's Scotch Whisky, Skinnygirl Cocktails, Cruzan Rum, Hornitos Tequila, Knob Creek Bourbon, Laphroaig Scotch Whisky, Kilbeggan Irish Whiskey, Larios Gin, Whisky DYC and DeKuyper Cordials.  Beam is focused on delivering superior performance with its unique combination of scale with agility and a strategy of Creating Famous Brands, Building Winning Markets and Fueling Our Growth. Beam and its 3,200 passionate associates worldwide generated 2013 sales of $2.55 billion (excluding excise taxes), volume of 37 million 9-liter equivalent cases and some of the industry’s fastest growing innovations. 

Headquartered in Deerfield, Illinois, Beam is traded on the New York Stock Exchange under the ticker symbol BEAM and is included in the S&P 500 Index and the MSCI World Index.  For more information on Beam, its brands, and its commitment to social responsibility, please visit www.beamglobal.com and www.drinksmart.com.

 

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this press release may constitute “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995.  These forward-looking statements generally can be identified by the words “will,” “expects,” “believes” and words or phrases of similar import.  Actual results could differ materially from those projected or forecast in the forward-looking statements.  The factors that could cause actual results to differ materially include, without limitation, risks or uncertainties associated with: the satisfaction of the conditions precedent to the consummation of the proposed transaction with Suntory Holdings, including, without limitation, the receipt of stockholder and regulatory approvals; unanticipated difficulties or expenditures relating to the proposed transaction; legal proceedings instituted against Beam and others following announcement of the proposed transaction; disruptions of current plans and operations caused by the announcement and pendency of the proposed transaction; potential difficulties in employee retention as a result of the announcement and pendency of the proposed transaction; the response of customers, distributors, suppliers and competitors to the announcement of the proposed transaction; and other factors described in Beam’s annual report on Form 10-K for the year ended December 31, 2012 filed with the U.S. Securities and Exchange Commission (the “SEC”). Beam assumes no obligation to update the information in this press release, except as required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.