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BEAM SUNTORY INC (BEAM)

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BEAM Inc : 05 03 12 BEAM REPORTS FIRST QUARTER RESULTS

05/03/2012 | 11:05am US/Eastern
  • Comparable Net Sales Rise at Double-Digit Rate on Continued Worldwide Gains for Bourbon Brands and New Product Launches
  • Diluted Earnings per Share from Continuing Operations Increase at Strong Double-Digit Rate
  • Results Reinforce Company's Confidence in 2012 Earnings Target

Deerfield, Illinois, May 3, 2012 - Beam Inc. (NYSE: BEAM), a leading global premium spirits company, today reported strong results for the first quarter of 2012. Reported net sales increased 2%, reflecting the adverse impact on comparisons of the initial sale of inventory in the year-ago period for the start-up of the company's enhanced Australia distribution agreement. On a comparable basis, net sales were up 13%, reflecting strong growth for the company's bourbon brands and shipments of newly introduced products.

Operating income grew faster than sales, benefiting from higher volumes, product mix and foreign exchange. Diluted earnings per share from continuing operations were $0.49, up 26%, on a reported basis. Diluted EPS before charges/gains was $0.53, up 29%, reflecting strong operating performance and the benefit of lower interest expense.

Continued Market Outperformance

"We indicated we expected a strong start to 2012, and the first quarter was a little better than we anticipated as we benefited from strong demand and excellent initial sell-in for new product launches that are front-loaded in 2012," said Matt Shattock, president and chief executive officer of Beam.

"Consistent with our long-term goals, we once again outperformed our global market on sustained momentum for our Power Brands, led by continued gains for Jim Beam and Maker's Mark in the fast-growing bourbon category," Shattock continued. "Our organic growth strategy is proving highly effective. Our innovation pipeline delivered several exciting new products across categories that helped boost our sales in our seasonally smallest quarter. Once again, our comparable net sales growth was broad-based across our three regions, and emerging markets delivered strong double-digit gains. We expanded margins and delivered double-digit growth in operating income and earnings per share."

For the first quarter of 2012:

  • Income from continuing operations was $78.4 million, or $0.49 per diluted share, compared to $61.7 million, or $0.39 per share, for the first quarter of 2011.
  • Excluding charges and gains, diluted EPS from continuing operations was $0.53, up 29% from $0.41 in the year-ago quarter.
  • Net sales were $533.8 million (excluding excise taxes), up 2%.
  • Net sales were up 13% on a comparable basis, which adjusts for foreign exchange, acquisitions/divestitures, and the impact of the Australia spirits distribution agreement announced in the first quarter of 2011.
    • Comparable net sales were up 12% in North America, up 12% in Europe/Middle East/Africa (EMEA), and up 16% in Asia Pacific/South America (APSA).
  • Operating income was $131.1 million, up 17%.
    • Operating income before charges/gains was $138.0 million, also up 17%.
  • Adjusted return on invested capital (rolling 12 months) was 7% and was 23% excluding intangibles.

Enhanced Confidence in 2012 Earnings Target

"We're encouraged by the strength of our first quarter results and our continued outperformance against our market. Our momentum is carrying into the second quarter, which is already off to a strong start. As a reminder, second quarter results will cycle against our 2011 innovations that launched principally in Q2 last year," Shattock said.

"The strength of our first quarter and our continuing momentum reinforce our confidence in our 2012 earnings target. Given that it is still early in the year, we're currently maintaining our target to deliver high-single-digit growth in diluted EPS before charges/gains for 2012," Shattock said.

"Beam is benefitting from strong worldwide demand for bourbon and the success of our innovations, and we continue to expect that our global spirits market will grow value in the range of 3%. As the year progresses, we'll closely monitor the macro-economic environment, consumer demand for our latest innovations, growth in the global bourbon market, and the potential for improvement in the pricing environment across categories. We're also looking forward to completing the acquisition of Pinnacle Vodka, which we believe will further enhance our prospects to maximize long-term shareholder value," Shattock concluded.

Key Brand Performance
Comparable net sales growth, year-to-date 2012 (January - March):

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 to third parties.
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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, Canadian Club Whisky, Courvoisier Cognac, Teacher's Scotch Whisky, Kilbeggan Irish Whiskey, Laphroaig Scotch Whisky, Cruzan Rum, Hornitos Tequila, Knob Creek Bourbon, EFFEN Vodka, Pucker Flavored Vodka, Larios Gin, Whisky DYC, DeKuyper Cordials, and Skinnygirl Cocktails. 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 2011 sales of $2.8 billion, volume of 34 million 9-liter 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.

Forward-Looking Statements

This press release contains forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. Readers are cautioned that these forward-looking statements speak only as of the date hereof, and the company does not assume any obligation to update, amend or clarify them to reflect events, new information or circumstances occurring after the date of this release. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to: general economic conditions and credit market instability, particularly in Europe; customer defaults and related bad debt expense; competitive market pressures (including pricing pressures); changes in customer preferences and trends; risks pertaining to strategic acquisitions and joint ventures, particularly financial and integration risks; any possible downgrades of the company's credit ratings; commodity and energy price volatility; risks associated with doing business outside the United States, including currency exchange rate risks; inability to attract and retain qualified personnel; the impact of excise tax increases and customs duties on distilled spirits; the status of the U.S. rum excise tax cover-over program; dependence on performance of distributors and other marketing arrangements; costs of certain employee and retiree benefits and returns on pension assets; tax law changes and/or interpretation of existing tax laws; potential liabilities, costs and uncertainties of litigation; ability to secure and maintain rights to trademarks and trade names; impairment in the carrying value of goodwill or other acquired intangible assets; disruptions at production facilities; risks related to the Home & Security spin-off; and other risks and uncertainties detailed from time to time in the Company's Securities and Exchange Commission filings.

Use of Non-GAAP Financial Information

This press release includes measures not derived in accordance with generally accepted accounting principles ("GAAP"), including comparable net sales, diluted EPS before charges/gains, operating income before charges/gains, adjusted return on invested capital, and adjusted return on invested capital excluding intangibles. These measures should not be considered in isolation or as a substitute for any measure derived in accordance with GAAP, and may also be inconsistent with similar measures presented by other companies. Reconciliation of these measures to the most closely comparable GAAP measures, and reasons for the company's use of these measures, are presented in the attached pages.

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