Brown–Forman · 10-Q · Item 2 MD&A

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

This MD&A is intended to help the reader better understand Brown-Forman, our operations, our financial results, and our current business environment. You should read the following discussion and analysis in conjunction with both our unaudited Condensed Consolidated Financial Statements and related notes included in Part I, Item 1 of this Quarterly Report and our 2026 Form 10-K. Note that the results of operations for the three months ended July 31, 2026, are not necessarily indicative of future or annual results. Unless otherwise indicated, all related commentary is on a reported basis and is for the three months ended July 31, 2026, compared to the same period last year.

Our MD&A is organized as follows:

Table of Contents

Page

Overview

Results of Operations

Non-GAAP Financial Measures

Liquidity and Financial Condition

Overview

Fiscal 2027 Year-to-Date Highlights

•We delivered net sales of $911 million for the three months ended July 31, 2026, a decrease of 1%. T1T2The decrease was driven by unfavorable price/mix and the end of the Korbel relationship, partially offset by higher volumes, the positive effect of foreign exchange, and the impact of the JDCC transition.

◦T3From a brand perspective, net sales declines were driven by the end of the Korbel relationship, as well as the decline of used barrel sales and tequilas, partially offset by the growth of RTDs.

◦T4From a geographic perspective, net sales declines in developed international markets and the United States were partially offset by growth in emerging markets.

•We delivered gross profit of $549 million for the three months ended July 31, 2026, a decrease of 1%. T5Gross margin increased 0.4 percentage points to 60.2% from 59.8% in the same period last year. The increase in gross margin was driven by lower costs and the end of the Korbel relationship, partially offset by the negative effect of foreign exchange and unfavorable price/mix.

•We delivered operating income of $252 million for the three months ended July 31, 2026, a decrease of 3%. T6Operating margin decreased 0.5 percentage points to 27.7% from 28.2% in the same period last year, primarily due to higher operating expenses, partially offset by gross margin expansion.

•We delivered diluted earnings per share of $0.38 for the three months ended July 31, 2026, an increase of 6% from the $0.36 reported for the same period last year, driven by the lower non-operating postretirement expense and the accretive impact from share repurchases executed in the prior year, partially offset by the decrease in operating income.

Summary of Operating Performance

Three Months Ended July 31,

(Dollars in millions)

Reported Change

Organic Change1

Net sales

$

$

(1

%)

(1

%)

Cost of sales

(2

%)

(5

%)

Gross profit

(1

%)

1

%

Advertising

(5

%)

(4

%)

SG&A

4

%

5

%

Restructuring and other charges

—

%)

nm2

Other expense (income), net

(2)

nm2

nm2

Total operating expenses3

2

%

(1

%)

Operating income

(3

%)

4

%

Non-operating postretirement expense

$

$

1

nm2

Interest expense, net

$

$

3

%

As a percentage of net sales4

Reported Change

Gross margin

%

%

pp

Operating margin

%

%

pp

Effective tax rate

%

%

pp

Reported Change

Diluted earnings per share

$

$

6

%

Note: Totals may differ due to rounding

1See “Non-GAAP Financial Measures” for details on our use of “organic change,” including how we calculate these measures and why we believe this information is useful to readers.

2Percentage change is not meaningful.

3Total operating expenses include advertising expenses, SG&A expenses, restructuring and other charges, and other expense (income), net.

4Year-over-year changes in percentages are reported in percentage points (pp).

Results of Operations

Market Highlights

The following table provides supplemental information for our largest markets. We discuss results of the markets most affecting our performance below the table.

Top Markets

Net Sales % Change vs. Prior Year Period

Geographic area1

Reported

A&D

Other Items2

Foreign Exchange

Organic3

United States

(3

%)

4

%

(1

%)

—

%

—

%

Developed International

(6

%)

—

%

—

%

(1

%)

(8

%)

Germany

%)

—

%

—

%

(1

%)

%)

Australia

%

—

%

—

%

(5

%)

4

%

United Kingdom

(5

%)

—

%

—

%

(1

%)

(6

%)

France

%)

—

%

—

%

(1

%)

%)

Spain

%)

—

%

—

%

—

%

%)

Rest of Developed International

%)

—

%

—

%

2

%

(8

%)

Emerging

%

—

%

—

%

(2

%)

9

%

Mexico

%

—

%

—

%

%)

%

Poland

(4

%)

—

%

—

%

(1

%)

(5

%)

Brazil

%)

—

%

—

%

(3

%)

%)

Türkiye

%)

—

%

—

%

%

9

%

Rest of Emerging

%

—

%

—

%

—

%

%

Travel Retail

(1

%)

—

%

—

%

—

%

(1

%)

Non-branded and bulk

%)

—

%

—

%

—

%

%)

Total

(1

%)

2

%

(1

%)

(1

%)

(1

%)

Note: Results may differ due to rounding

1See “Definitions” for definitions of market aggregations presented here.

2“Other Items” includes “JDCC transition.” See “Non-GAAP Financial Measures” for additional details.

3See “Non-GAAP Financial Measures” for details on our use of “organic change” in net sales, including how we calculate this measure and why we believe this information is useful to readers.

The United States’ net sales declined 3%.

T7The decline was driven by:

•the end of the Korbel relationship;

•an estimated net decrease in distributor inventories reflecting prior-year distributor transitions; and

•decreases of JDTB following the distributor inventory build ahead of the prior-year product launch.

These declines were partially offset by:

•higher volumes of JDTW due to timing of distributor ordering patterns in our transition markets; and

•the impact of the JDCC transition.

Developed International

Germany’s net sales declined 11%, driven by lower volumes of JDTW and JD RTD/RTP, as well as the unfavorable timing of retailer ordering patterns. These declines were partially offset by the launch of JDTB.

Australia’s net sales increased 10%, driven by the positive effect of foreign exchange and the growth of JDTW, which partially benefited from favorable timing of retailer ordering patterns.

The United Kingdom’s net sales declined 5%, driven by declines of JDTW and Gentleman Jack, as well as lower volumes of JDTH, partially offset by the launch of JDTB.

France’s net sales declined 14%, led by lower volumes of JDTW and JDTH, as well as the unfavorable timing of retailer ordering patterns, partially offset by the launch of JDTB.

Spain’s net sales declined 16%, driven by lower volumes of JDTW.

Rest of Developed International’s net sales declined 10%, driven by lower volumes of JDTW, led by Switzerland and Italy; an estimated net decrease in distributor inventories; and the negative effect of foreign exchange. These decreases were partially offset by the continued international launch of JDTB.

Emerging

Mexico’s net sales increased 26%, driven by higher volumes of New Mix and JD RTD/RTP due to strong consumer demand, as well as the positive effect of foreign exchange.

Poland’s net sales declined 4%, driven by lower volumes of JDTW, partially offset by the launch of JDTB.

Brazil’s net sales declined 12%, driven by lower volumes of JDTW, JDTA, and JDTH, partially due to the unfavorable timing of the retailer ordering patterns. These declines were partially offset by the launch of JDTB.

Türkiye’s net sales declined 14%, driven by the negative effect of foreign exchange, partially offset by higher volumes and prices across our portfolio, led by JDTW.

Rest of Emerging’s net sales increased 20%, driven by broad-based volume gains of JDTW and the continued international launch of JDTB, led by the United Arab Emirates.

Travel Retail’s net sales declined 1%, as the channel was impacted by the Middle East geopolitical headwinds. The declines were driven by lower volumes of Gin Mare, partially offset by the launch of JDTB.

Non-branded and bulk’s net sales decreased 61%, driven by the decline of used barrel sales.

Brand Highlights

The following table provides supplemental information for our largest brands. We discuss results of the brands most affecting our performance below the table.

Major Brands

Net Sales % Change vs. Prior Year Period

Product category / brand family / brand1

Reported

A&D

Other Items2

Foreign Exchange

Organic3

Whiskey

—

%

—

%

—

%

—

%

—

%

JDTW

—

%

—

%

—

%

—

%

—

%

JDTH

%)

—

%

—

%

—

%

%)

Gentleman Jack

%)

—

%

—

%

2

%

%)

JDTA

(8

%)

—

%

—

%

—

%

(8

%)

JDTF

%)

—

%

—

%

—

%

%)

Woodford Reserve

—

%

—

%

—

%

—

%

—

%

Old Forester

1

%

—

%

—

%

—

%

1

%

Rest of Whiskey

%

—

%

—

%

—

%

%

Ready-to-Drink

%

—

%

(4

%)

(6

%)

%

JD RTD/RTP

6

%

—

%

(7

%)

(3

%)

(4

%)

New Mix

%

—

%

—

%

%)

%

Tequila

%)

—

%

—

%

(1

%)

%)

el Jimador

%)

—

%

—

%

(1

%)

%)

Herradura

%)

—

%

—

%

(2

%)

%)

Rest of Portfolio

%)

%

—

%

—

%

%)

Non-branded and bulk

%)

—

%

—

%

—

%

%)

Note: Results may differ due to rounding

1See “Definitions” for definitions of brand aggregations presented here.

2“Other Items” includes “JDCC transition.” See “Non-GAAP Financial Measures” for additional details.

3See “Non-GAAP Financial Measures” for details on our use of “organic change” in net sales, including how we calculate this measure and why we believe this information is useful to readers.

Whiskey

JDTW’s net sales were flat, as growth in the United States, due to timing of distributor ordering patterns in our transition markets, and higher volumes in the United Arab Emirates were offset by lower volumes in Brazil, Germany, and France.

JDTH’s net sales declined 10%, driven by lower volumes in the United States and Chile, partially due to an estimated net decrease in distributor inventories.

Gentleman Jack’s net sales declined 16%, driven by lower volumes in the United States and decreases in the United Kingdom.

JDTA’s net sales declined 8%, driven by decreases in Brazil and lower volumes in Chile, partially due to an estimated net decrease in distributor inventories.

JDTF’s net sales declined 10%, driven by broad-based volume declines, led by the United States.

Woodford Reserve’s net sales were flat, as higher net pricing was offset by an estimated net decrease in distributor inventories.

Old Forester’s net sales increased 1%, driven by the United States, as favorable mix was partially offset by an estimated net decrease in distributor inventories.

Rest of Whiskey’s net sales increased 33%, driven by the continued international launch of JDTB, led by Brazil, partially offset by an estimated net decrease in distributor inventories in the United States.

Ready-to-Drink

JD RTD/RTP brands’ net sales increased 6%, driven by the impact of the JDCC transition, the positive effect of foreign exchange, and higher volumes in Mexico. These increases were partially offset by declines in Germany and the United States.

New Mix’s net sales increased 48%, driven by higher volumes in Mexico, the positive effect of foreign exchange, and the launch in the United States.

Tequila

el Jimador’s net sales declined 10%, driven by lower net pricing in the United States.

Herradura’s net sales declined 17%, driven by lower volumes in the United States and lower net pricing in Mexico.

Rest of Portfolio’s net sales declined 35%, driven by the end of Korbel relationship and lower volumes of Gin Mare.

Non-branded and bulk’s net sales decreased 61%, driven by the decline of used barrel sales.

Year-Over-Year Comparisons

Net Sales

For the three months ended July 31,

Percentage change versus the prior year period ended July 31

Volume1

Price/mix1

A&D

Other Items2

Foreign Exchange

Total

Net sales

7

%

(8

%)

(2

%)

1

%

1

%

(1

%)

Note: Results may differ due to rounding

Net sales were $911 million, a decrease of $13 million, or 1%, driven by unfavorable price/mix and the end of the Korbel relationship, partially offset by higher volumes, the positive effect of foreign exchange, and the impact of the JDCC transition.

•Volume increased 7%, driven by New Mix and the continued international launch of JDTB, partially offset by lower volumes of JD RTD/RTP and JDTH.

•Price/mix declined 8%, driven by unfavorable portfolio mix from New Mix.

See “Results of Operations - Market Highlights” and “Results of Operations - Brand Highlights” above for further details on the factors contributing to the change in reported net sales for the three months ended July 31, 2026.

Cost of Sales

For the three months ended July 31,

Percentage change versus the prior year period ended July 31

Volume1

Cost/mix1

A&D

Other Items2

Foreign Exchange

Total

Cost of sales

7

%

%)

(3

%)

1

%

4

%

(2

%)

Note: Results may differ due to rounding

Cost of sales were $362 million, a decrease of $10 million, or 2%, driven by favorable cost/mix and the end of the Korbel relationship, partially offset by higher volumes, the negative effect of foreign exchange, and the impact of the JDCC transition.

•Volume increased 7%, driven by New Mix and the continued international launch of JDTB, partially offset by lower volumes of JD RTD/RTP and JDTH.

•Cost/mix declined 11%, driven by favorable portfolio mix from New Mix and the timing of cost fluctuations, partially offset by unfavorable fixed cost absorption related to decreased production of our full-strength portfolio and inflation on our input costs.

1Represents the percentage change after considering the impact of A&D and the JDCC transition.

2“Other Items” includes “JDCC transition.” See “Non-GAAP Financial Measures” for additional details.

Gross Profit/Margin

For the three months ended July 31,

Note: results may differ due to rounding

Gross profit totaled $549 million, a decrease of $3 million, or 1%.

Gross margin increased to 60.2% from 59.8% in the same period last year. The increase in gross margin was driven by lower costs and the end of the Korbel relationship, partially offset by the negative effect of foreign exchange and unfavorable price/mix.

Operating Expenses

For the three months ended July 31,

Percentage change versus the prior year period ended July 31

Reported

A&D

Other Items*

Foreign Exchange

Organic^

Advertising

(5

%)

2

%

—

%

—

%

(4

%)

SG&A

4

%

—

%

1

%

—

%

5

%

Total operating expenses**

2

%

(1

%)

(2

%)

1

%

(1

%)

Note: results may differ due to rounding

Operating expenses totaled $297 million, an increase of $5 million, or 2%. The increase in operating expenses was driven by the absence of prior-year substitution drawback claims and higher SG&A expenses, partially offset by the absence of the prior-year restructuring initiative costs and lower advertising expenses.

•Advertising expenses decreased 5% for the three months ended July 31, 2026, driven by the timing of spend across the Jack Daniel’s family of brands, as declines in spending for JDTW more than offset the increased investment for the continued international launch of JDTB.

•SG&A expenses increased 4% for the three months ended July 31, 2026, driven by the timing of costs related to targeted organizational realignments.

*“Other Items” in gross profit includes “JDCC transition.” “Other Items” in operating expenses includes “substitution drawback claims,” “restructuring initiative,” and “JDCC transition.” See “Non-GAAP Financial Measures” for additional details.

**Total operating expenses include advertising expenses, SG&A expenses, restructuring and other charges, and other expense (income), net.

^See "Non-GAAP Financial Measures" for details on our use of "organic change," including how we calculate these measures and why we believe this information is useful to readers.

Operating Income/Margin

For the three months ended July 31,

Percentage change versus the prior year period ended July 31

Reported

A&D

Other Items1

Foreign Exchange

Organic2

Operating income

(3

%)

3

%

2

%

2

%

4

%

Note: results may differ due to rounding

Operating income totaled $252 million, a decrease of $8 million, or 3%.

Operating margin decreased 0.5 percentage points to 27.7% from 28.2%, primarily due to higher operating expenses, partially offset by gross margin expansion.

1“Other Items” includes “substitution drawback claims,” “restructuring initiative,” and “JDCC transition.” See “Non-GAAP Financial Measures” for additional details.

2See "Non-GAAP Financial Measures" for details on our use of "organic change," including how we calculate these measures and why we believe this information is useful to readers.

Effective Tax Rate

For the three months ended July 31, 2026, the effective tax rate was 23.0% compared to 22.5% for the same period last year.

The primary factors contributing to the increase were:

•increased tax impact of foreign operations; and

•higher state taxes.

The primary factor offsetting the increase was:

• the favorable year-over-year impact of prior fiscal year true-ups.

Diluted Earnings Per Share

T8Diluted earnings per share of $0.38 for the three months ended July 31, 2026, increased 6% from the $0.36 reported for the same period last year, driven by the lower non-operating postretirement expense and the accretive impact from share repurchases executed in the prior year, partially offset by the decrease in operating income.

Below we discuss our outlook for fiscal 2027, which reflects the trends, developments, and uncertainties that we expect to affect our business.

T9We anticipate the operating environment for fiscal 2027 to remain challenging, as macroeconomic pressures and geopolitical instability continue to negatively impact consumer behavior and beverage alcohol consumption, particularly within developed markets. We remain committed to building our business for the long term while focusing intensely on the variables within our control. T10We believe we will benefit in fiscal 2027 from our previously announced restructuring initiative and U.S. distributor changes, and continued new product innovation, such as the expansion of JDTB. Considering these factors, we expect the following in fiscal 2027.

•Organic net sales to be approximately flat.

•Organic operating income to decline in the 3% to 5% range.

•Our effective tax rate to be in the range of approximately 20% to 22%.

•Capital expenditures planned to be in the range of $60 to $70 million.

Non-GAAP Financial Measures

We report our financial results in accordance with GAAP. Additionally, we use some financial measures in this report that are not measures of financial performance under GAAP. These non-GAAP measures, defined below, should be viewed as supplements to (not substitutes for) our results of operations and other measures reported under GAAP. Other companies may define or calculate these non-GAAP measures differently.

“Organic change” in measures of statements of operations. We present changes in certain measures, or line items, of the statements of operations that are adjusted to an “organic” basis. We use “organic change” for the following measures: (a) organic net sales; (b) organic cost of sales; (c) organic gross profit; (d) organic advertising expenses; (e) organic SG&A expenses; (f) organic other expense (income), net; (g) organic operating expenses1; and (h) organic operating income. To calculate these measures, we adjust, as applicable, for (1) acquisitions and divestitures, (2) other items, and (3) foreign exchange. We explain these adjustments below.

•“Acquisitions and divestitures.” This adjustment removes (a) the gain or loss recognized on the sale of divested brands and certain assets, (b) any non-recurring effects related to our acquisitions and divestitures (e.g., transaction, transition, and integration costs), (c) the effects of operating activity related to acquired and divested brands, including certain divested agency brands, for periods not comparable year over year (non-comparable periods), and (d) fair value changes to contingent consideration liabilities. Excluding non-comparable periods allows us to include the effects of acquired and divested brands only to the extent that results are comparable year over year. For the first quarter of fiscal 2027, we had the following acquisitions and divestitures adjustments:

During fiscal 2023, we acquired the Gin Mare brand. The purchase price consisted of cash paid at the acquisition date plus contingent consideration that is payable in cash upon exercise by the sellers no later than July 2027. This adjustment removes the fair value impact from our other expense (income), net and operating income for the first quarter of fiscal 2026 and fiscal 2027. See Note 13 to the Condensed Consolidated Financial Statements for more information.

During the first quarter of fiscal 2026, we ended our Korbel relationship. This adjustment removes the net sales, cost of sales, operating expenses, and operating income for the non-comparable period, which is activity from May through June of fiscal 2026.

•“Other items.” Other items include the additional items outlined below.

“Restructuring initiative.” During the first quarter of fiscal 2026, we incurred $12 million in restructuring and other charges associated with the restructuring initiative and completed the sale of Brown-Forman Cooperage facility and related assets. The actions associated with this initiative were substantially completed during fiscal 2026. This adjustment removes the restructuring initiative impact from our operating expenses and operating income for the first quarter of fiscal 2026. See Note 5 to the Condensed Consolidated Financial Statements for more information.

“Substitution drawback claims.” During the first quarter of fiscal 2026, we recognized a net benefit of $18 million related to the collection of substitution drawback claims filed with the U.S. Government between fiscal 2016 and 2019. As of the end of the first quarter of fiscal 2026, all claims had been collected. This adjustment removes the benefit from our other expense (income), net and operating income.

“Jack Daniel’s Country Cocktails business model change (JDCC transition).” During fiscal 2026, we agreed to conclude our relationship with Pabst Brewing Company for flavored malt beverages within the United States. We began transitioning the management of JDCC’s supply, sales, marketing, and distribution in the first quarter of fiscal 2027. This adjustment removes the non-comparable operating activity related to JDCC products for the first quarter of fiscal 2026 and fiscal 2027.

•“Foreign exchange.” We calculate the percentage change in certain line items of the statements of operations in accordance with GAAP and adjust to exclude the cost or benefit of currency fluctuations. Adjusting for foreign exchange allows us to understand our business on a constant-dollar basis, as fluctuations in exchange rates can distort the organic trend both positively and negatively. (In this report, “dollar” means the U.S. dollar unless stated otherwise.) To eliminate the effect of foreign exchange fluctuations when comparing across periods, we translate current-year results at prior-year rates and remove transactional and hedging foreign exchange gains and losses from current- and prior-year periods.

1Operating expenses include advertising expenses, SG&A expenses, restructuring and other charges, and other expense (income), net.

We use the non-GAAP measure “organic change,” along with other metrics, to: (a) understand our performance from period to period on a consistent basis; (b) compare our performance to that of our competitors; (c) calculate components of management incentive compensation; (d) plan and forecast; and (e) communicate our financial performance to the Board of Directors, stockholders, and investment community. We provide reconciliations of the “organic change” in certain line items of the statements of operations to their nearest GAAP measures in the tables under “Results of Operations” and in the“Reconciliation of Non-GAAP Changes” table below. We have consistently applied the adjustments within our reconciliations in arriving at each non-GAAP measure.

We believe these non-GAAP measures are useful to readers and investors because they enhance the understanding of our historical financial performance and comparability between periods. When we provide guidance for organic change in certain measures of the statements of operations we do not provide guidance for the corresponding GAAP change, as the GAAP measure will include items that are difficult to quantify or predict with reasonable certainty, such as foreign exchange, which could have a significant impact to our GAAP income statement measures.

Reconciliation of Non-GAAP Changes

Reported

A&D

Other Items

Foreign Exchange

Organic

Net Sales

(1)

%

2

%

(1)

%

(1)

%

(1)

%

Cost of Sales

(2)

%

3

%

(1)

%

(4)

%

(5)

%

Gross Profit

(1)

%

1

%

—

%

1

%

1

%

Advertising Expenses

(5)

%

2

%

—

%

—

%

(4)

%

SG&A Expenses

4

%

—

%

1

%

—

%

5

%

Operating Expenses1

2

%

(1)

%

(2)

%

1

%

(1)

%

Operating Income

(3)

%

3

%

2

%

2

%

4

%

1Total operating expenses include advertising expenses, SG&A expenses, restructuring and other charges, and other expense (income), net.

Note: results may differ due to rounding

Liquidity and Financial Condition

Liquidity. We generate strong cash flows from operations, which enable us to meet current obligations, fund capital expenditures, and return cash to our stockholders through regular dividends and, from time to time, through share repurchases and special dividends. We believe our investment-grade credit ratings (A2 by Moody’s and A- by Standard & Poor’s) provide us with financial flexibility when accessing global debt capital markets and allow us to reserve adequate debt capacity for investment opportunities and unforeseen events.

Our cash flows from operations are supplemented by our cash and cash equivalent balances, as well as access to other liquidity sources. Cash and cash equivalents were $308 million at April 30, 2026, and $301 million at July 31, 2026. As of July 31, 2026, approximately 53% of our cash and cash equivalents were held by our foreign subsidiaries whose earnings we expect to reinvest indefinitely outside of the United States. We continue to evaluate our future cash requirements and may decide to repatriate additional cash held by our foreign subsidiaries, which may require us to provide for and pay additional taxes.

We have a $900 million commercial paper program that we use, together with our cash flows from operations, to fund our short-term operational needs. See Note 7 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report for outstanding commercial paper balances, interest rates, and days to maturity at April 30, 2026, and July 31, 2026. The average balances, interest rates, and original maturities during the periods ended July 31, 2025 and 2026, are presented below.

Three Months Average

(Dollars in millions)

Average commercial paper (par amount)

Average interest rate

Average days to maturity at issuance

Our commercial paper program is supported by available commitments under our $900 million bank credit facility that expires on May 26, 2029. Although unlikely, under extreme market conditions, one or more participating banks may not be able to fund its commitments under our credit facility. To manage this counterparty credit risk, we partner with banks that have investment grade credit ratings, limit the amount of exposure we have with each bank, and monitor each bank’s financial condition.

Our most significant short-term cash requirements relate primarily to funding our operations (such as expenditures for raw materials, production and distribution, advertising and promotion, and current taxes), dividend payments, and capital investments. We expect to meet our planned liquidity needs through cash generated from operations, borrowings under our commercial paper program, and financing in the credit markets and the debt capital markets. Our most significant longer-term cash requirements primarily include payments related to our long-term debt, employee benefit obligations, and deferred tax liabilities.

We believe our current liquidity position, supplemented by our ability to generate positive cash flows from operations in the future, and our ample debt capacity enabled by our strong short-term and long-term credit ratings, will be sufficient to meet all of our expected future short- and long-term financial commitments.

Cash flows

Three Months Ended July 31,

(Dollars in millions)

Change

Net cash provided by (used in):

Operating activities

$

$

$

Investing activities

$

2

$

$

Financing activities

$

$

$

Cash provided by operating activities of $173 million during the three months ended July 31, 2026, increased $13 million from the same period last year, reflecting higher earnings and lower working capital requirements.

Cash used for investing activities was $13 million during the three months ended July 31, 2026, compared to $2 million in cash provided by investing activities during the same period last year. The $15 million decrease largely reflects the absence of $33 million in proceeds from the sale of our Brown-Forman Cooperage assets in May 2025, partially offset by a $19 million decline in capital expenditures.

Cash used for financing activities was $164 million during the three months ended July 31, 2026, compared to $138 million in cash used for financing activities during the same prior-year period. The $26 million increase largely reflects our repayment of the $343 million (€300 million) principal amount of the 1.20% senior notes that matured in July 2026, partially offset by a $319 million increase in net proceeds from short-term borrowings.

Dividends. See Note 8 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report for information about cash dividends declared per share on our Class A and Class B common stock during fiscal 2027.