Preliminary brief— based on press release only. Full analysis including management tone and Q&A will be added when the transcript is available.

BF.B · Q3 2026 Earnings

Brown–Forman

Reported March 4, 2026

30-second summary

30-second take: Brown-Forman reported Q3 FY26 net sales of $1.06B (+2% YoY reported, +1% organic), operating income of $340M (+21% reported, flat organic), GAAP EPS of $0.58, and net income of $267M. Management reaffirmed the FY26 low-single-digit organic decline guide on both sales and operating income and lowered the effective tax rate range by 200bps midpoint to 19–21% — a non-operational positive that flatters EPS without changing the operating story. The 9M view underneath is starker than the Q3 headline: 9M reported net sales -2% (flat organic), with Rest of Portfolio 9M reported -34% (+16% organic, reflecting acquisitions/divestitures), Tequila 9M reported -6% (-7% organic), and U.S. 9M reported -8% (-1% organic, heavily impacted by the end of the Korbel relationship and absence of the Sonoma-Cutrer TSA), against Emerging 9M reported +16% (+15% organic) and New Mix 9M reported +37% (+34% organic). Reaffirming the FY guide despite a Q3 reported beat tells you management still expects Q4 to be materially weaker — the same H1-load, H2-true-up posture that has defined this fiscal year.

Headline numbers

EPS

Q3 FY2026

$0.58

Revenue

Q3 FY2026

$1.06B

+2.0% YoY

Gross margin

Q3 FY2026

60.6%

Operating margin

Q3 FY2026

32.1%

Key financials

Q3 FY2026

Metric	Q3 FY2026	YoY	Q2 FY2026	QoQ
Revenue	$1.06B	+2.0%	$1.04B	+1.9%
EPS	$0.58	—	$0.47	+23.4%
Gross margin	60.6%	—	59.3%	+130bps
Operating margin	32.1%	—	29.4%	+270bps

Guidance

Guidance broadly reaffirmed with tax rate lowered by 200 bps midpoint; Q3 organic revenue growth of +2% YoY mixed with significant geographic and category headwinds.

Guidance is issued for both next quarter and the full year. Both may appear below.

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Effective tax rate	FY 2026	21% to 23%	19% to 21%	-200 bps midpoint (from 22% to 20%)	Raised

Reaffirmed unchanged this quarter: Organic net sales (low-single digit decline), Organic operating income (low-single digit decline), Capital expenditures ($110 to $120 million)

Segment performance

Q3 FY2026

Segment	Q3 FY2026
New Mix Net Sales Growth	37% reported, 34% organic

Platform metrics

Q3 FY2026

Segment	Q3 FY2026
Jack Daniel's Tennessee Whiskey (JDTW) Depletions	10.4 million 9-liter cases
New Mix Depletions	9.8 million 9-liter cases
Jack Daniel's Family of Brands Depletions	22.1 million 9-liter cases
Operating Cash Flow (9-month YTD)	$709 million
Free Cash Flow (9-month YTD)	$628 million

Profitability

Q3 FY2026

Segment	Q3 FY2026
Operating Margin	32.1%
Gross Margin	60.6%

Management tone

No tone-shift analysis available for this quarter.

Recurring themes management leaned on this quarter:

Structural vs. cyclical consumer demand debate unresolved; management maintains cyclical view but acknowledges uncertaintyDistributor network restructuring (14 markets, 7 new partners) as long-term strategic imperative offsetting near-term disruptionUsed barrel sales cliff as significant but predictable margin headwindEmerging markets (Mexico, Brazil, Turkey) as only reliable growth engine; developed markets (US, Europe, UK) persistently weakPremium portfolio positioning and share gains among distilled spirits as relative strengthJack Daniels turnaround via brand health initiatives and innovation (Tennessee Blackberry launch) still early-stage with limited evidence of success

Risks management surfaced:

Tariff environment volatility and indirect/direct cost impacts from Canada and other geographiesGeopolitical uncertainty suppressing consumer confidence across US and developed international marketsGLP-1 drugs, cannabis legalization, and Gen Z lifestyle shifts as potential structural headwinds to spirits categoryDistributor transition disruption in US across 14 markets in H1 FY26European market persistent weakness with no clear inflection point; Italy transition risks; Canadian American Spirit products off-shelf indefinitely

Answers to last quarter's watch list

U.S. organic trajectory — Mixed. U.S. 9M organic is -1%, indicating flat-to-slightly-negative underlying demand rather than the sharper deterioration implied by the -8% reported figure (which reflects the Korbel exit and Sonoma-Cutrer TSA absence). The reported headline is worse than the operational reality. Status: Resolved neutrally

Organic operating income deleverage — Q3 organic operating income was flat YoY despite organic net sales +1%, suggesting in-quarter deleverage eased. 9M organic OI is -3% against flat 9M organic sales, consistent with the persistent margin pressure pattern. Status: Resolved neutrally

JDTW depletions trend — JDTW 9M depletions of 10.4M nine-liter cases ran -4% YoY, with shipments -3%. The BlackBerry halo effect has not produced family-level stabilization; the Jack Daniel's family is -2% depletions on 22.1M cases.

Resolved negatively

Tequila — does Herradura stabilize? — Tequila 9M organic -7%, with Herradura specifically -12% organic and -11% reported, driven by lower U.S. volumes in a competitive category. The stabilization narrative is not supported by the 9M data.

Resolved negatively

CFO succession timing — The press release did not name a successor or update the succession timeline.

Continue monitoring

CapEx cut follow-through — CapEx guidance held at $110–120M, unchanged from the prior quarter. Status: Reaffirmed / neutral

What to watch into next quarter

Q4 organic sales delta: with FY guide reaffirmed at low-single-digit decline and 9M organic running flat, Q4 organic must print a meaningful decline for the FY guide to land — watch for organic -3% or worse, which would validate the H2-true-up framing management has telegraphed all year.

U.S. organic trajectory separation from reported: with U.S. 9M organic -1% versus reported -8%, watch for the size of the Korbel/Sonoma-Cutrer drag to clarify whether underlying U.S. demand is genuinely stabilizing or whether the organic line deteriorates further once the comparable becomes cleaner.

Rest of Portfolio reported vs. organic gap: the 50-point spread between -34% reported and +16% organic in 9M is the cleanest illustration of the divestiture drag. Watch the Q4 release for any change in the organic trajectory that would signal underlying agency-brand and Gin Mare/Diplomático momentum is fading.

CFO succession: the "early next calendar year" window has closed without resolution. A named successor in Q4 would remove an overhang; further slippage into FY27 would compound the leadership uncertainty against the operating reset.

Used-barrel disclosure: management has framed used-barrel sales as "more than half" lower YoY for the full year. Watch for a discrete Q4 dollar disclosure that quantifies the FY26 drag and sets the FY27 baseline — this is the cleanest setup item for next fiscal year's algorithm.

Tax rate as a recurring lever: a third non-operational guide adjustment (further tax-rate cut, further CapEx cut, or working capital release) in Q4 would confirm management is managing EPS rather than operating performance through FY26.

Sources

Brown-Forman FY26 Q3 press release: https://www.sec.gov/Archives/edgar/data/14693/000001469326000005/fy26_q3xerevergreen.htm

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