Good morning. My name is Dorothy and I will be your conference operator today. At this time, I would like to welcome everyone to the Brown-Forman Third Quarter Fiscal 2018 Conference Call. [Operator Instructions] Thank you. I would now like to turn the conference over to Jay Koval, Vice President and Director of Investor Relations. Sir, you may begin your conference.

Thanks, Dorothy and good morning, everyone. I want to thank you for joining us today for Brown-Forman’s third quarter 2018 earnings call. Joining me today are Paul Varga, our Chairman and Chief Executive Officer; Jane Morreau, Executive Vice President and Chief Financial Officer, and Brian Fitzgerald, Chief Accounting 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 the company undertakes no obligation to update any of these statements, whether due to new information, future events or otherwise. This morning, we issued a press release containing our results for the third quarter of fiscal 2018 in addition to posting presentation materials that Jane will walk through momentarily. Both the release and the presentation can be found on our Web site under the section titled Investors, Events & Presentations. In the press release, we have listed a number of the risk factors that you should consider in conjunction with our forward-looking statements. Other significant risk factors are described in our Form 10-K, Form 8-K and 10-Q reports filed with the Securities and Exchange Commission. During this call, we will be discussing certain non-GAAP financial measures. These 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 with that, I will turn the call over to Jane for her prepared remarks.

Thanks, Jay, and thanks for joining us for our third quarter earnings call. During my comments today, I will reference the slides we posted to our Web site this morning to help you walk through our two main areas of focus which includes, first, a review of our strong year-to-date results. And second, our revised full year outlook for fiscal 2018. After I complete my prepared remarks, I'll turn the call over to Paul for his comments and then we’ll open it up to Q&A. Let me start with the overall highlights which are shown on Slide 3. First, our reported net sales grew 9% during the nine months ended January 31, 2018, and reported operating income increased 15%. Sales and operating income growth were propelled by strong underlying trends and helped by foreign exchange as well as an uptick in year-over-year distributor inventory. Second, our underlying net sales growth maintained solid momentum in the third quarter, up 6% resulting in year-to-date growth of 7%. Third, we continued to deliver meaningful operating leverage with reported operating margins of 170 basis points. This expansion was due to tight management of SG&A as well as favorable timing of cost during the fiscal year. And finally, we reaffirmed our full year outlook for underlying net sales and operating income growth of 6% to 7% and 8% to 9% respectively. We also updated our fiscal 2018 earnings per share outlook to $1.43 to $1.48. This revised range reflects the impacts from tax reform and the series of stakeholder actions we announced in January, including the anticipation creation of a charitable foundation and fully funding our pension plan, not to mention our recently effected 5/4 stock split and additional foreign exchange tailwinds. I will come back to our outlook in a few moments. Before going…

Thank you, Jane, and good morning, everyone. With three quarters behind us, I believe we remain on track to deliver great full year fiscal year '18 results. With the base line operating margins and return on invested capital that Brown-Forman enjoys, we can drive exceptional shareholder value if we do two things very well. One, grow our top line sales and a healthy in a healthy and sustainable manner. And, two, deploy capital effectively over time. And evidence of both of these are present in today's earning announcement, so let me briefly highlight them. A year ago at this time the company's growth in underlying sales should trail down to around 3%, which is not a bad top line growth rate at all but it was below our historical norm. heading into this fiscal year, we had aimed to essentially double that rate of growth and I am pleased that our fiscal year to date results reflect an underlying sales growth rate of 7%, aided by an improving environment but also attributable to effective resource re-allocation on our part. I am very pleased with this progress, particularly the healthy balance of portfolio and geographic growth. I want to thank by colleagues across Brown-Forman for their efforts in producing it. And on the capital deployment front, Brown-Forman continues to demonstrates in my view an excellent balance of reinvesting in our business, returning capital to shareholders and retaining capital flexibility for the future. More specific examples of this capital deployment balance include, our strong capital investment over the last several years behind product expansion, home place marketing and hospitality, as well as fully funding our pension obligation and establishing a philanthropic foundation. Another example is the quality of our dividend program, highlighted by 34 consecutive years of dividend increases and supplemented by…

[Operator Instructions] Your first question comes from the line of Lauren Lieberman with Barclays.

I was hoping you could talk a little bit, first about Russia. Mentioning the route to consumer change, I think it was also something in the 10-Q about the last quarter but last quarter was called out as being a benefit to pricing and then I think this quarter there was some pull forward of volume ahead of that change. So just detail on what the change is and how we should think about if there was some timing issues benefiting Russia in the quarter in effect, you know slows down as we go forward.

Yes. Sure, I can take that. We did have a route to consumer change last year's fourth quarter where we changed our importation to us partly and then continue to do with our other player as well. What we are talking about this quarter is that we are actually changing who actually distributes our product in Russia and there was a buy in as abnormally happens when you change out distributors. We are going to this new distributor because we believe they have got very strong on-premise reach, if you will and can help build our brands even more. So there was some one time in the quarter and there were some one time in last year's fourth quarter and that’s what we were referring to as one of the reasons why our emerging market growth is still going to be strong but perhaps not as strong as what you have seen here today. With that being said, as I look ahead to next year, I think the emerging markets have stabilized and are growing nicely and I am very optimistic about the growth overall as we look at even from the market in Russia with all the noise that’s in it.

Yes. Our Q4 numbers, we would expect to have very tough comps for Russia overall so when we report in the summer related to Russia, you will see that change from highlighted because of the difficult comps we have got in Q4.

Okay. And then also on Mexico, which was notably strong again this quarter. A lot of other consumer product companies we have talked about, the environment in Mexico get a big tougher from a macro standpoint. And I was just curious about premium spirits, right. So not just the growth for your brands but is the sort of premium end of the market feeling okay? Do you feel like is this going to be a kind of high end versus everyday CPG products then with some difference in terms of what's impacting the consumer environment.

Well, I think the thing for us down there is that the whiskey category continues from a relatively -- it's still small by comparison to the size of the distilled spirits markets down there but has been, over the many years has been growing well. And then I think one call out I would give for our particular portfolio down there has been the continued performance of our Herradura Ultra brand, which is at the high end of the local tequila market. And that particular small sub-segment, I might call it crystalinos are continuing to do very well and Herradura Ultra has had a very strong and now multiyear strong performance. So that’s one item that would be influencing us relative to the broader macro step that you cite.

Okay. Great. And then if I could, I mean I just was curious a little bit about Old Forester. Just a longer term question. If you could just kind of talk a little bit about some of the efforts behind Old Forester and kind of bringing that brand. Putting it in a -- premiumizing the image a bit perhaps, in advance of the home place opening this spring. And just kind of give us an update on kind of what you have done proactively maybe over the last 12 plus months to generate the kind of performance you are seeing now and heading into that home place opening.

Sure. I mean it's a blend of activities now over several years that includes a lot of the tried and true stuff, everything from portfolio management to home place marketing investment as you just cited. Repackaging is another element of it and then also managing price volume, I think effectively. But the combination of them have not only increased the consumers acceptance of the Old Forester trademark but also improved our profitability considerably. The examples at site are the -- just if we went back ten years ago, we would not have had as expanse of a portfolio on Old Forester in terms of the super premium expressions. We would have just then beginning to sell Birthday bourbon around that time and then more recently the [distillery rose] [ph] series which has been an exceptionally well at higher price points. I mean the brand continues to also, has it really amazing, a bit of retro appeal, while its new in terms of basic awareness to many people. The fact that it has been around for so long and once was larger and then first because quite a bit smaller than its peak years ago. We are experiencing, I think some benefit from retro appeal and you see this across the few categories. We are seeing some of it in beer as well and so all of these are contributing to this recent resurgence in Old Forester. And I think it's still -- I mean on the scale of what's possible for particularly the United States but also outside the United States, I mean we still have quite a bit of geographic expansions to do. It's been doing well in some major metro markets and some of the bourbon heartland but as the American whiskey category and bourbon continues to surge across the United States, I think Old Forester should be able to ride that momentum quite effectively.

Your next question comes from the line of Brett Cooper with Consumer Edge.

In the release and in the prepared comments you had talked about the benefit of tax and carefully evaluating additional opportunities to invest in long term growth. And while I appreciate we are not going to get fiscal '19 spending plans and outlook, I was just hoping you could talk maybe a little bit more generally about where you see the best opportunities for incremental investment.

Jane, why don’t you start that?

Yes. What I would say is, we are in the midst of our fiscal '19 planning process and so we will share all this with you in June. I do say that we just finished a pretty thorough look at our -- just or opportunities behind American whiskey and so if I was to say where there is more opportunities, potential opportunities to invest, I would say in some of our super premium plus American whiskey. Further we have got new brands in our portfolio within the last two years as the acquisitions of the Scotches and then of course our Slane Irish whiskey that just launched this, about a year ago this time. And so both of those portfolios I guess Scotch and Irish, I would say have opportunities I think to head further investments behind them. So we will definitely share more with you in June.

Yes. I think one perspective I have got on the timing of our valuation of this and the arrival of the tax reform is that in parts it was intended to spur investment, right. And at our company, of course if we go back four or five years ago, we started to really ramp up our investment behind our capacity expansion and home place marketing. Some of the things I mentioned in my prepared remarks. And so we have sort of proceeded tax reforms and it's interesting, I mean the timing actually may come to be kind of nice for us because the benefits we will be seeing down at the net income line can help to offset some of the cost that are associated with those expansions as they make their way, depreciate their way into our cost. So that’s another reference point for us as we evaluate how to invest and how to think about what to do with tax reforms. So we are putting it all in the mix and we got another couple of months here to figure that out but I couldn’t agree more with Jane. I mean the premium aspects of our portfolio, the single malt, the Irish whiskeys, the tequilas, but also very much coming into focus for us to these premium plus American whiskey opportunities around the world.

Great. And if I could just follow up on a different topic. You guys [indiscernible] I think Jane made the comment about promotional intensity in the U.S. and I was just wondering what you guys are seeing, do you think we are sort of at a trough for that or are we going to continue to see relatively high levels of promotions and pricing aggressiveness in the home U.S. market.

That’s a hard thing to forecast. I think some of it is associated simply with competitive intensity right now. I mean it's such an attractive market, the United States, and it has growing distilled spirits industry which is taking share within beverage alcohol overall. And then you just have such a large influx of new competitors over these last few years, it's mathematically more difficult when there is that many alternatives to be able to push price. I do think that an offset to that, and it's very timely, is the appeal of the premium plus segments. Where one of the way you can effectively get pricing is to have your portfolio at those higher price points grow more rapidly, bringing in the very valuable benefits of mix. And so I think that has come into focus I think more for us over the last couple of years. But I do think, just because of the large number of competitors in this particular country, you will continue to see it less robust than it has been previously. There are still opportunities market by market and channel by channel and size by size, to look for opportunities to grow. And of course some of it could be reflective of -- if things such as the U.S. economy continues to grow and show momentum, if inflation comes in and you start to see input costs go up, I mean those could be things that compel higher pricing. But right now I think we were pleased with the fact that a lot of our growth has really come from more volume related in this particularly competitive time and so I don’t see that easing here in the next, certainly not one of our planning assumptions for FY'19.

One thing I would add on to what Paul said is the one category that may have an opportunity for pricing is tequila, simply because of the supply demand dynamics. We talked a little bit about this in our second quarter in terms of agave prices being an all time high. We have heard several of our competitors indicate that they are going to take pricing. And so I do believe because of that dynamic, there could possibly be an opportunity to take some pricing in that category.

It is. And we don’t manage the local markets on this basis but certainly the stuff that’s happened over the last year in terms of favorable FX environment is net beneficial to our reported net sales.

Your next question comes from the line of Vivien Azer with Cowen.

So I wanted to stick with the pricing topic. But could you, all this tariff talk continues to mount, it seems like the White House is saying this morning they are going to announce by the end of the week. And while I know there is a lot of uncertainty around the potential response from the EU, can you just offer some color on how you think about your price elasticity in developed Europe. Just so we can have a framework in the back of our minds. Thanks.

Yes. I mean I don’t know that -- I mean over in Europe the thing that has of course influenced our pricing posture more than anything over the last decade has been the shift of our business driven by Jack Daniel’s in a conscious and very favorable way for Brown-Forman. Which at the beginning of that period years ago it would have been had a different mix of on-premise and off-premise and as we move to much more prominent off-premise brand and thereby making the brand more affordable to broader number of consumers, you also expose yourself then to the realities of very large customers who have lots of options for promoting brands. And so it's just we found over the years is navigating that kind of pricing environment should be -- I think we have done pretty well but just more challenging then advancing your price for example in the on-premise. So that has been the largest influence and I think you would have to look market by market. I mean we have founded equally difficult in Europe as well to just, I would say with consistently raised prices year on year. So I think we have had to be thoughtful about that going all the way back to really like 2013 and '14 when we were -- probably felt the environment was more conducive to raising prices in Europe. So it's kind of again like in the United States, a state by state, it's country by country over there. I mean more generally on this topic, I mean it's obviously developing as we sit here and speak and we are going to monitor the potential for retaliatory tariffs closely as you will. And of course we are sharing our point of view in Washington as well. Just some…

Your next question comes from the line of Judy Hong with Goldman Sachs.

This is actually Freda Zhuo on for Judy. So I wanted to get more clarity on what we were seeing in terms of the latest in terms of the U.S. spirits category. Understood on the increasing divergence between [indiscernible] and maybe what people are actually seeing on the ground. But it also sounds like some of your peers have mentioned that they have seen a fundamental slowdown. So I would love to hear your take in terms of whether or not that squares with what you are seeing currently. Is the slowdown, if any, is that mostly on price or is there a volume component. And then any other color in terms of drivers.

Okay. Yes. I mean I continue on a blended view between the sources we have, feel that the category of TDS continues to grow at something at 3.5% to 4% range. Maybe modestly off versus the higher part of that range towards the lower part of that range over the last 12 months. It's really hard to know because these sources aren't that accurate in capturing everything. But my view and of that we would certainly be observing it particularly over the last couple of years it's becoming more volume driven than pure price driven although it continues to benefit from mix as the premium categories continue to outpace the lower price categories. I mean for our company, I mean of course we focus first and foremost on the Jack Daniel’s brand and we continue to think over the last 12 months it's holding up reasonably well. My estimate of what it grew over the last 12 months was around 2%, something in that range. Down a little bit from where it would have been 12 months ago but continuing to perform well relative to the other large, very large distilled spirits brands with which it also competes. I think there is some pricing, and competitive pricing can be a contributing factor and that’s been I think observed by many people. I think another thing that could be influencing the Jack Daniel’s Black Label trends here in the last 12 months is actually something potentially of our own doing, but it was also kind of positive which is a year ago we were experiencing lower growth rates on Jack Daniel’s Tennessee Fire, Jack Daniel’s Tennessee Honey and Gentleman Jack, and they have accelerated. And then of course we have introduced Jack Daniel’s Tennessee Rye this fall. And if you just…

Okay. Great. And then I also wanted to clarify a little bit in terms of the foundation contribution impact. That sounds like $60 million or $70 million 4Q but that it would also be a positive to profit growth for next year, like on easier comps and maybe lower ongoing contributions versus maybe what you had before. Could you help us give some context as to what that phasing could look like, just in terms of the difference in the contributions now versus what you had been doing before.

Certainly, I will take that. So just to remind you while we did this, is we really had this opportunity to tax efficiently prefund a portion of our -- something we believe in and we believe in strongly, which is charitable giving in the communities where our employees work and live. And so you are right. We are going to see a onetime hit, it's going to hit SG&A. We pulled it, we pulled out for underlining for $60 million to $70 million. The way you should think about it is as goes forward, so this is only a portion of what we get annually. So think about of return on asset, our investments of about 5% if you use something in that ballpark, you could assume that about half of our annual charitable giving would not be therefore within our P&L going forward. So we de-linked it to the performance of our business. Does that help?

Your next question comes from the line of Mark Swartzberg with Stifel Nicolaus.

Two questions. One, an upside, if you will, question. The other one might be called a risk question, also pertaining to the U.S. And I do want to say, those prepared remarks were extremely helpful and the results speak for themselves but we do need to look at risk. On the upside side of things, you seem to be managing this A&P very well and I appreciate that it will go up in the fourth quarter but how much opportunities do you see for added marketing efficiency there. And then on the SG&A side, it makes a tone of sense to share the wealth. It's a great year and I understand the discretionary bonuses, but as you think about going forward, the constraint you are seeing there and demonstrating there in SG&A, how much opportunity do you see for that to continue, Jane. And then I can probably kick the U.S. question over to you, Paul.

Yes. So I would say it goes back to our initiatives that we announced earlier back in June, we announced the $100 million initiative. That wasn’t just for the SG&A line item. It was for every line item over the P&L. Every cost line item of the P&L and you are right, if you look at this year combined with last year, we have had held of our SG&A quite nicely in terms of year-over-year growth. We believe there is still opportunities. We continue to manage it the way we have been looking at it. We have made significant investments in our SG&A and route to consumers. We were able to actually do that this year with funding Spain and really not having a significant increase in SG&A other than the decisions we have recently made that are going to cause the SG&A to go. And so we continue to believe there is additional opportunities around discretionary spending. Continued opportunities to leverage investments we have made in the past and so I don’t anticipate SG&A to increase high single digits or something like that in the future. Do I think that there might be possibilities to increase behind new opportunities? Certainly. We haven't identified yet and that will come through our planning process.

One of the things I have thought about, just if you take a, if you go back multiyear here and think about it, we always are sensitive to this. And we never internally or even with our external communications want to imply that in the mix of operating investments A&P is always preferred over SG&A or that A&P is good and SG&A is bad. And it's easy for people to take that away in an environment where so many companies are doing zero base budgeting, I think. The circumstances at Brown-Forman were such that after we had been doing such work on portfolio reshaping and we brought in these brands or started these brands that were reasonably small and needed, we felt in the instances of brands that were premium, say near the Jack Daniel’s price point, they kind of needed A&P. I mean to launch a Jack Daniel’s Rye or to go give support to Jack Daniel’s Tennessee Fire and Tennessee Honey brands like that which have become prominent in our results, they needed some A&P. Some of these other brands, well, actually require people. And not that they won't also need A&P, so it will be the different blend of A&P and SG&A and I think what you have seen from us, if you just went back like the couple of fiscal years, particularly. And they probably carry into next fiscal year as well. Us reallocating resources from SG&A towards A&P in order to reflect the portfolio of reshaping we had done and what the needs of the business were at that time. I am not 100% sure where we will land on that as we go F '19, F '20 etcetera because I mean some of the markets where we may go, they may not be conducive…

Really helpful. If I could ask one A&P question which simply is, a lot of companies drive a distinction between working and non-working dollars. Maybe that’s not the way you all think about it but when you think about marketing efficiency, do you see a lot of opportunities for gains there to mitigate the pace of increase.

Yes. A little. I think one of the things we cited a year ago was trying to favor, even within our A&P, our dollars more towards consumer facing or marketplace facing and looking for ways to, if you could, if you are going to reallocate even say within the marketing budget, maybe spend a little bit less on research and making the ads and spending a little bit more on actually spending behind them. So I do think those are things that we remain sensitive to. I think there is always opportunity. When you get to be a company the size of Brown-Forman, there is always opportunities in both A&P and SG&A to strive to be more efficient. And I think that is the general call out. When a year ago we started to emphasize that $100 million, it was not to say that there aren't opportunities to continue to invest in route to market or reinvest behind our people. But the business needs and the competitiveness that we were experiencing a year ago, we really felt like if we needed to pause a little, just temporarily on things like training for a year while we went and really spent against the consumer, it was a worthwhile trade off. And I think some of that is actually in the list that we have seen this year.

Really helpful. And on the U.S., can you speak, Paul, to what you think as a sustainable rate of revenue growth for your business here. And that’s in the context of, and I know it's only a quarter, but you had 3 on a 3 and of course you had some inventory builds in the second quarter. So it seems like your business really has consistently trended in the 4s and 5s. But you think about some of the things that have come up in this call and it seems like it might be more reasonable to start thinking about 3s and 4s. But this component of your business, obviously your global opportunities are huge. So could you just speak to what you think sustainable growth here is in the U.S.?

You said it really well. I mean, yes, we expect the international piece to outpace and lift the overall company. But I would, I mean my view, and I will put one asterisk against this, is that I would start with the base assumption that we would grow at the distilled spirits level. We certainly start with that assumption. And as has the balance of American whiskey category that’s growing faster but of course us having one of the leading brands in all of distilled spirits, Jack Daniel’s, which is more than 150 years old. But we continue, we do have ambitions to grow it. The thing that could alter the view I think just a little bit depends on our innovation. If you go back and look, the influence of innovation in the trends over many years could be one of the determining factors as whether we perform sort of at or slightly above it. And during those, I remember during those years where Tennessee Honey came in or Tennessee Fire, or if Woodford has an offshoot. Because all of our plans, remember the one thing about when you are led by American whiskey, we make the volume well in advance. So I mean our assumptions have to be pretty good. And so we look at the market place and base our production plan on what we think is a reasonable but also we try to be a little bit on the ambitious side because we want to be more net winners than losers in this game. But I think your assumptions related to where the general industry growth rate is, is a good one with the only caveat that the way we flex in innovation could be a net benefit.

I will just add on to Paul's and agree a hundred percent, the other thing that I think is very optimistic about our business is where our growth is coming from. And it is at the higher end. And so from that, well, these are getting to be meaningful in numbers from now from Woodford Reserves, from the Herraduras, and they are growing faster than TDS. And so they effectively can have, as we have talked about several times in prior calls, an effective mix increase. So can take your amount above your typical 4% [indiscernible] value, if you will. Depending on fast they are growing and the meaningfulness of these brands as they get bigger and bigger, and they are doing that.

Yes. I mean over the year, our portfolio reshaping has enabled us to get that kind of benefit. So if you are like -- most notably cite a few years back the sale of Southern Comfort which was really dragging the overall growth rate down and then with that out of the portfolio and then the available and attention and investments we have put behind the brands that Jane is citing there, you really do get some nice portfolio lift.

And our final question comes from the line of Robert Ottenstein with Evercore.

Couple of things that we haven't really touched on for a while, and I know it's very small for you, it's challenging. But China, potentially a large market. You guys generally look to invest way ahead of the curve and I am just wondering if, just would kind of love to hear your thoughts in terms of what you may be doing now so that China could be an interesting market for you 5, 10, 15 years from now.

It's something we will be talking about here over the next few weeks as well. I think we have regularly, I mean it almost feels like very three years, flexed with the market place there and altered in some ways, might be a little bit of our portfolio approach or our route to market approach which has been the most significant thing we have done here in the last 10 to 15 months. But we have also been learning in that market place related to ways to be more effective with, led by Jack Daniel’s of course. And the things that I think have peaked our interest more recently are things like ecommerce and adding that much more significantly to the mix of how we serve our consumers over there. And so far we have had some promising results over the last six months to a year that have encouraged us. We will probably be making more investments in that arena in the future. And that topic even beyond China will be a very interesting one as it unfolds in the years ahead. And my view is, is that is important a topic whether you think about it from a marketing standpoint or route to consumer. It's continuing to evolve fast and is something that has our attention and we feel like China can be for the company one of the great learning places for us and beneficial while learning through the channel of ecommerce. Jane, you want to add anything to that?

You got it.

Great. And then I guess it's been about a year or so on Slane. Just wondering to what extent that’s meeting your expectations and how you see the Irish category developing.

It's continuing to do, the category is continuing to do very well. I mean the influx of announcements regarding new brands will be evidence of that. I mean it's so early with the brand still but the reaction we are getting to the range of things that we have done thus far, which are establish the production and home place operation, package the product, name it and put excellent product in the bottle. All of those are going extremely well. But I would go back to the earlier comments that Jane made and I made, that they always are tweaking your sort of brand building model to build at this stage for that brand comes into two basic things. Getting it into the right distribution and making people aware of it, because what we have in the bottle and the way people are receiving it, is probably beyond our expectations even. And so a very important set of conversations along the lines of where will you invest incrementally and how are you thinking about these small brands. I mean this is a ripe area. And factoring that earlier blend of A&P relative to investing in people, this is one of the primary brand opportunities where we are going to have to figure that out. What is the optimal mix? And we are not, as you know from this one, just from the upfront cost associated with the operation in Ireland. I mean we really believe in this opportunity. And so it doesn’t bother us at all to invest way ahead of what we see in that opportunity. And I was just getting the mix right and getting our organization who is out there. We are asking them to simultaneously drive Jack Daniel’s, which is in and of itself could captivate an entire organization while also developing this. And so trying to figure out how to best accomplish that is a lively conversation at Brown-Forman right now.

I was just going to say, Robert, just a reminder on this. In terms of just overall impact to our earnings and our sales this year, it's not. It wasn’t intended to be a big deal. We are constrained by our liquid that we bought. Because we are actually not producing that off shelf until now. We have started that process. And so we have been finishing whiskey we bought on the market. We are only in about 18 states and with travel retail in a few areas. So it's, as Paul said, we are very very excited. And the comments we are getting back, if you can get that liquid to people's mouth. So working with getting people to become aware of this will pay dividend for us in the future when we have more and more whiskey down the road.

It so closely reminds me Woodford Reserve in 1996-1997. I mean it absolutely reminds of that with one benefit to this, that Woodford at that time probably didn’t have which was that the Irish whiskey category is already booming. Back then the American whiskey category was not. And so that’s why we have got such excitement about this.

Great. Very exciting. And then just one final question, Jane. Going back to tax reform, pretty significant material difference for the Brown-Forman company and understand kind of what you are doing now and I know that you are talking also internally about what you may do perhaps differently on the investment front. I am just wondering, if the tax reform has any impact on your thinking in terms of capital allocation, balance sheet, dividend, share buyback, on an ongoing basis kind of going forward. Should we expect your behavior on those fronts to be any different than it was in the past.

What I would say and actually Paul talked about it, our really balance view in terms of our capital deployment over the past decade. Past number of years now [completely] [ph] peak that recipe again, the next ten years we would be very happy. What I would say is one of the overarching things we will continue to do is keeping our flexibility as we have over the past decade in terms of where we want to invest, what becomes available to us. Our priorities will not change, first and foremost. Our capital priorities of investing fully behind the business, which we have been doing quite a bit of that, as Paul mentioned earlier, was our capital investments and taking another look at opportunities to day with us which I will be going into our -- I always call this a stew, if you will, that we do during our planning process and looking at everything that’s available to us. And then of course we are going to continue to increase dividends but as it relates to our prioritization, it will continue to be, does it change my idea on the prioritization of our capital needs.

Robert, the most significant swing factor often times that changes the mix in a given year, I don’t know it would change if you did sort of ten-year view, but in the given year it is usually around things like acquisitions. Which you can't -- it is hard to plan for, at least what Brown-Forman approach is. And if you look at the multiples that are out there today and what's available, it's just in my view is that across the industry when picking. So we have done a lot of capital here recently so my view is that taking a pause and generating our great cash flows is just fine. But you had an add-on, what were the supplementary comments you were going to make?

Well, no, I was just wondering, given as you said the multiples are high and they have always been high for high quality products. I am just wondering given your lower tax rate, does it make sense to perhaps have a higher dividend payout then you have historically had or more share buybacks. Is your thinking on any of those topics changing?

I think it's the same circumstantial in terms of timing but as I highlighted, I mean we believe, particularly because we are such a long-term shareholder base. That providing cash back to shareholders has always been a priority but done I think really thoughtfully and in balanced, mixed way the way we have done it. And we obviously just returned a bunch here or we announced returning a bunch with the special dividend. And we have done a few of those now over the past few years. We have just prior to that had more aggressively than recently bought back in consecutive years, a bunch of our stock at what we thought were attractive prices. And so we continue to see us approach the mix like that going forward. Really continuing to be very shareholder oriented in our approach to it. And then we will just have to wait and see what happens with acquisitions. I will tell you, strategically, if I look out to 2025 and I mean like we have done a lot of the hard work on portfolio reshaping at a position I think our particular portfolio right now happens to be in categories that have wonderful favor. I mean they are just as great momentum where we are positioned and we cross our fingers that that continues but if it does, I mean we have got a lot of work to do just to go drive the business against these opportunities. So my view is, wait and see a little bit on it but don’t expect a ton of change unless there is some dramatic change in the environment out there that would create great opportunities for us.

Thank you, Paul and Jane, and thanks to all of you for joining us today for Brown-Forman's third quarter earnings call. And please feel free to reach out to us if you have any additional questions. Good bye.

Thank you. Ladies and gentlemen, this does conclude today's conference call. You may now disconnect.